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G.R. No. 102998 July 5, 1996

BA FINANCE CORPORATION, petitioner,

vs.
HON. COURT OF APPEALS and ROBERTO M. REYES, respondents.

VITUG, J.:p

The case at bar is a suit for replevin and damages. The petition for review on certiorari assails the
decision of the Court of Appeals 1 in CA-G.R. CV No. 23605 affirming that of the Regional Trial Court of
Manila, Branch
XX, 2 which has disposed of its Civil Case No. 87-42270 in this wise:

WHEREFORE, the case against defendant-spouses (sic) Reynaldo Manahan is

hereby dismissed without prejudice, for failure to prosecute. Plaintiff having failed to
show the liability of defendant John Doe in the person of Roberto M. Reyes, the case
against the latter should likewise be dismissed. Moreover, plaintiff is hereby directed
to return the vehicle seized by virtue of the order of seizure issued by this Court with
all its accessories to the said Roberto M. Reyes. 3

The decisions of both the appellate court and the court a quo are based on a like finding of the facts
hereinafter briefly narrated.

The spouses Reynaldo and Florencia Manahan executed, on 15 May 1980, a promissory
note 4 binding themselves to pay Carmasters, Inc., the amount of P83,080.00 in thirty-six monthly
installments commencing 01 July 1980. To secure payment, the Manahan spouses executed a deed of
chattel mortgage 5 over a motor vehicle, a Ford Cortina 1.6 GL, with motor and serial number CUBFWE-
801010. Carmasters later assigned 6 the promissory note and the chattel mortgage to petitioner BA
Finance Corporation with the conformity of the Manahans. When the latter failed to pay the due
installments, petitioner sent demand letters. The demands not having been heeded, petitioner, on 02
October 1987, filed a complaint for replevin with damages against the spouses, as well as against a John
Doe, praying for the recovery of the vehicle with an alternative prayer for the payment of a sum of money
should the vehicle not be returned. Upon petitioner's motion and the filing of a bond in the amount of
P169,161.00 the lower court issued a writ of replevin. The court, however, cautioned petitioner that
should summons be not served on the defendants within thirty (30) days from the writ's issuance, the
case would be dismissed to failure to prosecute. 7 The warning was based on what the court perceived to
be the deplorable practice of some mortgagees of "freezing (the) foreclosure or replevin cases" which
they would so "conveniently utilize as a leverage for the collection of unpaid installments on mortgaged
chattels." 8

The service of summons upon the spouses Manahan was caused to be served by petitioner at No.
35 Lantana St., Cubao, Quezon City. The original of the summons had the name and the signature
of private respondent Roberto M. Reyes indicating that he received, on 14 October 1987, a copy of
the summons and the complaint. 9 Forthwith, petitioner, through its Legal Assistant, Danilo E. Solano,
issued a certification to the effect that it had received from Orson R. Santiago, the deputy sheriff of the
Regional Trial Court of Manila, Branch 20, the Ford Cortina seized from private respondent Roberto M.
Reyes, the John Doe referred to in the complaint, 10 in Sorsogon, Sorsogon. 11 On 20 October 1987, the
lower court came out with an order of seizure.
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Alleging possession in good faith, private respondent filed, on 26 October 1987, a motion for an
extension of time within which to file his answer and/or a motion for intervention. The court granted
the motion.

A few months later, or on 18 February 1988, the court issued an order which, in part, stated:

Perusal of the record shows that an order for the seizure of personal property was
issued on October 20, 1987 in pursuance to a previous order of the Court dated
October 13, 1987. However, to date, there is no showing that the principal
defendants were served with summons inspite of the lapse of four (4) months.

Considering, this is a replevin case and to forestall the evils that arise from this
practice, plaintiff failing to heed the Order dated October 13, 1987, particularly
second paragraph thereof, the above-entitled case is hereby ordered DISMISSED for
failure to prosecute and further ordering the plaintiff to return the property seized with
all its accessories to defendant John Doe in the person of Roberto M. Reyes.

SO ORDERED. 12

On 26 February 1988, petitioner filed a notice of dismissal of the case "without prejudice and without
pronouncement as to costs, before service of Summons and Answer, under Section 1, Rule 17, of
the Rules of Court." 13 It also sought in another motion the withdrawal of the replevin bond. In view of the
earlier dismissal of the case (for petitioner's failure to prosecute), the court, on 02 March 1988, merely
noted the notice of dismissal and denied the motion to withdraw the replevin bond considering that the
writ of replevin had meanwhile been implemented. 14

On 09 March 1988, private respondent filed a motion praying that petitioner be directed to comply
with the court order requiring petitioner to return the vehicle to him. In turn, petitioner filed, on 14
March 1988, a motion for the reconsideration of the orders of 18 February 1988 and 02 March 1988
contending that: (a) the dismissal of the case was tantamount to adjudication on the merits that
thereby deprived it with the remedy to enforce the promissory note, the chattel mortgage and the
deed of assignment, under Section 3, Rule 117, of the Rules of Court; (b) the order to return the
vehicle to private respondent was a departure from jurisprudence recognizing the right of the
mortgagor to foreclose the property to respond to the unpaid obligation secured by the chattel
mortgage, and (c) there were no legal and factual bases for the court's view that the filing of the
replevin case was "characterized (by) evil practices." 15

On 20 April 1988, the court granted petitioner's motion for reconsideration and accordingly recalled
the order directing the return of the vehicle to private respondent, set aside the order dismissing the
case, directed petitioner "to cause the service of summons together with a copy of the complaint on
the principal defendants within five (5) days from receipt" 16 thereof at petitioner's expense, and
ordered private respondent to answer the complaint.

A few months later, or on 02 August 1988, petitioner filed a motion to declare private respondent in
default. The court granted the motion on that same day and declared private respondent "in default
for his failure to file the . . . answer within the reglementary period." 17 The court likewise granted
petitioner's motion to set the case for the presentation, ex parte, of evidence. Petitioner, thereupon,
submitted the promissory note, the deed of chattel mortgage, the deed of assignment, a statement of
account in the name of Florencia Manahan and two demand letters.

On 27 February 1989, the trial court rendered a decision dismissing the complaint against the
Manahans for failure of petitioner to prosecute the case against them. It also dismissed the case
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against private respondent for failure of petitioner to show any legal basis for said respondent's
liability. The court ratiocinated:

. . . . Roberto M. Reyes is merely ancillary debtor in this case. The defendant

spouses Manahan being the principal debtor(s) and as there is no showing that the
latter has been brought before the jurisdiction of this court, it must necessarily follow
that the plaintiff has no cause of action against said Roberto M. Reyes herein before
referred to as defendant John Doe. Under the circumstances, it is incumbent upon
the plaintiff to return the seized vehicle unto the said Roberto M. Reyes. 18

In its appeal to the Court of Appeals, petitioner has asserted that a suit for replevin aimed at the
foreclosure of the chattel is an action quasi in rem which does not necessitate the presence of the
principal obligors as long as the court does not render any personal judgment against them. This
argument did not persuade the appellate court, the latter holding that

. . . . In action quasi in rem an individual is named as defendant and the purpose of

the proceeding is to subject his interest therein to the obligation or lien burdening the
property, such as proceedings having for their sole object the sale or disposition of
the property of the defendant, whether by attachment, foreclosure, or other form of
remedy (Sandejas vs. Robles, 81 Phil. 421). In the case at bar, the court cannot
render any judgment binding on the defendants spouses for having allegedly violated
the terms and conditions of the promissory note and the contract of chattel mortgage
on the ground that the court has no jurisdiction over their persons no summons
having been served on them. That judgment, it rendered, is void for having denied
the defendants spouses due process of law which contemplates notice and
opportunity to be heard before judgment is rendered, affecting one's person or
property (Macabingkil vs. Yatco, 26 SCRA 150, 157).

It is next contended by appellant that as between appellant, as mortgagee, and John

Doe, whose right to possession is dubious if not totally non-existent, it is the former
which has the superior right of possession.

We cannot agree.

It is an undisputed fact that the subject motor vehicle was taken from the possession
of said Roberto M. Reyes, a third person with respect to the contract of chattel
mortgage between the appellant and the defendants spouses Manahan.

The Civil Code expressly provides that every possessor has a right to be respected
in his possession (Art. 539, New Civil Code); that good faith is always presumed, and
upon him who alleges bad faith on the part of a possessor rests the burden of proof
(Art. 527, ibid.); and that the possession of movable property acquired in good faith is
equivalent to a title; nevertheless, one who has lost any movable or has been
unlawfully deprived thereof, may recover it from the person in possession of the
same (Art. 559, ibid.). Thus, it has been held that a possessor in good faith is entitled
to be respected and protected in his possession as if he were the true owner thereof
until a competent court rules otherwise (Chus Hai vs. Kapunan, 104 Phil. 110; Yu, et
al. vs. Hon. Honrado, etc., et al., 99 SCRA 237). In the case at bar, the trial court did
not err in holding that the complaint does not state any cause of action against
Roberto M. Reyes, and in ordering the return of the subject chattel to him. 19

The appellate court, subsequently, denied petitioner's motion for reconsideration.

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In the instant appeal, petitioner insists that a mortgagee can maintain an action for replevin against
any possessor of the object of a chattel mortgage even if the latter were not a party to the mortgage.

Replevin, broadly understood, is both a form of principal remedy and of a provisional relief. It may
refer either to the action itself, i.e., to regain the possession of personal chattels being wrongfully
detained from the plaintiff by another, or to the provisional remedy that would allow the plaintiff to
retain the thing during the pendency of the action and hold it pendente lite. 20 The action is primarily
possessory in nature and generally determines nothing more than the right of possession. Replevin is so
usually described as a mixed action, being partly in rem and partly in personam in rem insofar as the
recovery of specific property is concerned, and in personam as regards to damages involved. As an
"action in rem," the gist of the replevin action is the right of the plaintiff to obtain possession of specific
personal property by reason of his being the owner or of his having a special interest
therein. 21 Consequently, the person in possession of the property sought to be replevied is ordinary the
proper and only necessary party defendant, and the plaintiff is not required to so join as defendants other
persons claiming a right on the property but not in possession thereof. Rule 60 of the Rules of Court
allows an application for the immediate possession of the property but the plaintiff must show that he has
a good legal basis, i.e., a clear title thereto, for seeking such interim possession.

Where the right of the plaintiff to the possession of the specific property is so conceded or evident,
the action need only be maintained against him who so possesses the property. In rem actio est per
quam rem nostram quae ab alio possidetur petimus, et semper adversus eum est qui rem possidet.
In Northern Motors, Inc. vs. Herrera, 22 the Court has said:

There can be no question that persons having a special right of property in the goods
the recovery of which is sought; such as a chattel mortgagee, may maintain an action
for replevin therefor. Where the mortgage authorizes the mortgagee to take
possession of the property on default, he may maintain an action to recover
possession of the mortgaged chattels from the mortgagor or from any person in
whose hands he may find them. 23

In effect then, the mortgagee, upon the mortgagor's default, is constituted an attorney-in-fact
of the mortgagor enabling such mortgagee to act for and in behalf of the owner. Accordingly,
that the defendant is not privy to the chattel mortgage should be inconsequential. By the fact
that the object of replevin is traced to his possession, one properly can be a defendant in an
action for replevin. It is here assumed that the plaintiffs right to possess the thing is not or
cannot be disputed.

In case the right of possession on the part of the plaintiff, or his authority to claim such possession or
that of his principal, is put to great doubt (a contending party might contest the legal bases for
plaintiffs cause of action or an adverse and independent claim of ownership or right of possession is
raised by that party), it could become essential to have other persons involved and accordingly
impleaded for a complete determination and resolution of the controversy. For instance,
in Servicewide Specialists, Inc., vs. Court of Appeals, et al., G.R. No. 103301, 08 December 1995,
this Court ruled.

While, in its present petition for review on certiorari, Servicewide has raised a
number of points, the crucial issue still remains, however, to be whether or not an
action filed by the mortgagee for replevin to effect a foreclosure of the property
covered by the chattel mortgage would require that the mortgagor be so impleaded
as an indispensable party thereto.

Rule 60 of the Rules of Court allows a plaintiff, in an action for the recovery of
possession of personal property, to apply for a writ of replevin if it can be shown that
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he is the owner of the property claimed . . . or is entitled to the possession thereof.'

The plaintiff need not be the owner so long as he is able to specify his right to the
possession of the property and his legal basis therefor. The question then, insofar as
the matter finds relation to the instant case, is whether or not the plaintiff (herein
petitioner) who has predicated his right on being the mortgagee of a chattel mortgage
should implead the mortgagor in his complaint that seeks to recover possession of
the encumbered property in order to effect its foreclosure.

The answer has to be in the affirmative. In a suit for replevin, a clear right of
possession must be established. A foreclosure under a chattel mortgage may
properly be commenced only once there is default on the part of the mortgagor of his
obligation secured by the mortgage. The replevin in the instant case has been sought
to pave the way for the foreclosure of the object covered by the chattel mortgage.
The conditions essential for that foreclosure would be to show, firstly, the existence
of the chattel mortgage and, secondly, the default of the mortgagor. These
requirements must be established since the validity of the plaintiffs exercise of the
right of foreclosure are inevitably dependent thereon. It would thus seem, considering
particularly an adverse and independent claim of ownership by private respondent
that the lower court acted improvidently when it granted the dismissal of the
complaint against Dollente, albeit on petitioner's (then plaintiff) plea, on the ground
that the "non-service of summons upon Ernesto Dollente (would) only delay the
determination of the merits of the case, to the prejudice of the parties." In Imson
v. Court of Appeals, we have explained:

. . . . An indispensable party is one whose interest will be affected by

the court's action in the litigation, and without whom no final
determination of the case can be had. The party's interest in the
subject matter of the suit and in the relief sought are so inextricably
intertwined with the other parties' that his legal presence as a party to
the proceeding is an absolute necessity. In his absence there cannot
be a resolution of the dispute of the parties before the court which is
effective, complete, or equitable.

Conversely, a party is not indispensable to the suit if his interest in

the controversy or subject matter is distinct and divisible from the
interest of the other parties and will not necessarily be prejudiced by
a judgment which does complete justice to the parties in court. He is
not indispensable if his presence would merely permit complete relief
between him and those already parties to the action or will simply
avoid multiple litigation.

Without the presence of indispensable parties to a suit or proceeding, a judgment of

a court cannot attain real finality. (Footnotes omitted.)

A chattel mortgagee, unlike a pledgee, need not be in, nor entitled to the possession of the property
unless and until the mortgagor defaults and the mortgagee thereupon seeks to foreclose thereon.
Since the mortgagee's right of possession is conditioned upon the actual fact of default which itself
may be controverted, the inclusion of other parties like the debtor or the mortgagor himself, may be
required in order to allow a full and conclusive determination of the case. When the mortgagee
seeks a replevin in order to effect the eventual foreclosure of the mortgage, it is not only the
existence of, but also the mortgagor's default on, the chattel mortgage that, among other things, can
properly uphold the right to replevy the property. The burden to establish a valid justification for that
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action lies with the plaintiff. An adverse possessor, who is not the mortgagor, cannot just be deprived
of his possession, let alone be bound by the terms of the chattel mortgage contract, simply because
the mortgagee brings up an action for replevin.

The appellate court, accordingly, acted well in arriving at its now questioned judgment.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED No costs.

SO ORDERED.

Padilla, Bellosillo, Kapunan and Hermosisima, Jr., JJ., concur.

G.R. No. 187944

VARMENCITA SUAREZ, Petitioner,

vs.
MR. and MRS. FELIX E. EMBOY, JR. and MARILOU P. EMBOY-DELANTAR, Respondents.

DECISION

REYES, J.:

For review in the instant Petition1 is the Decision2 rendered on March 19, 2009 and Resolution3
issued on May 5, 2009 by the Court of Appeals (CA) in CA-G.R. SP No. 03489. The CA granted the
Petition for Review4 filed by Mr. and Mrs. Felix Emboy, Jr. (Felix) and Marilou Emboy-Delantar
(Marilou) (respondents), seeking to reverse the decisions of the Regional Trial Court (RTC), Branch
12,5 and Municipal Trial Court in Cities (MTCC), Branch 3,6 of Cebu City, rendered on February 26,
2008 in Civil Case No. CEB-33328,7 and on September 25, 2006 in Civil Case No. R-49832,
respectively. The RTC affirmed the MTCC in upholding the claims of Carmencita Suarez
(Carmencita) in her complaint for unlawful detainer instituted against the respondents.

Antecedents

At the center of the dispute is a 222-square meter parcel of land, designated as Lot No. 1907-A-2
(subject lot) of the subdivision plan Psd-165686, situated in Barangay Duljo, Cebu City, and covered
by Transfer Certificate of Title (TCT) No. T-174880 issued in the name of Carmencita on February 9,
2005. The subject lot used to be a part of Lot No. 1907-A,8 which was partitioned in the following
manner among the heirs of Spouses Carlos Padilla (Carlos) and Asuncion Pacres (Asuncion):9

Lot No. TCT No. Heirs

1907-A-1 T-543459 Spouses Rogelio and Praxedes Padilla
1907-A-2 T-543460 Heirs of Vicente Padilla (Vicente), namely: (1) Azucena
Padilla, married to Felly Carrera; (2) Remedios Padilla
(Remedios), married to Oscar Dimay; (3) Veronica Padilla
(Veronica);10 and (4) Moreno Padilla (Moreno), married to
Teresita Curso (Teresita)
1907-A-3 T-543461 Cresencio Padilla
1907-A-4 T-543462 Fructousa Baricuatro
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1907-A-5 T-543463 Claudia Padilla-Emboy (Claudia)

A house, which is occupied by respondents Felix and Marilou, stands in the subject lot. The
respondents claim that their mother, Claudia, had occupied the subject lot during her lifetime and it
was earmarked to become her share in Lot No. 1907-A. They had thereafter stayed in the subject lot
for decades after inheriting the same from Claudia, who had in turn succeeded her own parents,
Carlos and Asuncion.11

In 2004, respondents Felix and Marilou were asked by their cousins, who are the Heirs of Vicente, to
vacate the subject lot and to transfer to Lot No. 1907-A-5, a landlocked portion sans a right of way.
They refused to comply insisting that Claudias inheritance pertained to Lot No. 1907-A-2.12

Not long after, the respondents received from Carmencitas counsel, Atty. Jufelenito R. Pareja (Atty.
Pareja), a demand letter, dated February 23, 2004, requiring them to vacate the subject lot. They
were informed that Carmencita had already purchased on February 12, 2004 the subject lot from the
formers relatives. However, the respondents did not heed the demand. Instead, they examined the
records pertaining to the subject lot and uncovered possible anomalies, i.e., forged signatures and
alterations, in the execution of a series of deeds of partition relative to Lot No. 1907-A. On August
13, 2004, they filed before the RTC of Cebu City a complaint13 for nullification of the partition and for
the issuance of new TCTs covering the heirs respective portions of Lot No. 1907-A.14

On December 8, 2004, Carmencita filed before the MTCC and against the respondents a complaint
for unlawful detainer, the origin of the instant petition. She alleged that she bought the subject lot
1w phi1

from Remedios, Moreno, Veronica and Dionesia,15 the registered owners thereof and the persons
who allowed the respondents to occupy the same by mere tolerance. As their successor-in-interest,
she claimed her entitlement to possession of the subject lot and the right to demand from the
respondents to vacate the same.16

The MTCC upheld Carmencitas claims in its decision rendered on September 25, 2006. The
respondents were ordered to vacate the subject lot and remove at their expense all the
improvements they had built thereon. They were likewise made solidarily liable to pay Carmencita
Php 20,000.00 as attorneys fees.17

In the Decision dated February 26, 2008, the RTC affirmed in its entirety the MTCC ruling.18

The respondents challenged the MTCC and RTC judgments through a Petition for Review19 filed
before the CA.

The respondents argued that they have been occupying the subject lot in the concept of owners for
several decades. Carmencita, on the other hand, was a buyer in bad faith for having purchased the
property despite the notice of lis pendens clearly annotated on the subject lots title. Even her
complaint for unlawful detainer was filed on December 8, 2004 subsequent to the respondents
institution on August 13, 2004 of a petition for nullification of the partition. Citing Sarmiento v.
CA,20 the respondents emphasized that "even if one is the owner of the property, the possession
thereof cannot be wrested from another who had been in the physical or material possession of the
same for more than one year by resorting to a summary action of ejectment."21 The respondents also
invoked the doctrine enunciated in Amagan v. Marayag22 that the pendency of another action
anchored on the issue of ownership justifies the suspension of an ejectment suit involving the same
real property. The foregoing is especially true in the case at bar where the issue of possession is so
interwoven with that of ownership. Besides, the resolution of the question of ownership would
necessarily result in the disposition of the issue of possession.
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The respondents also stressed that the deed of sale dated April 1, 2004, which was attached to the
complaint for unlawful detainer, bore tell-tale signs of being spurious. First, Atty. Parejas demand
letter sent to the respondents instead referred to a deed of sale dated February 12, 2004. Secondly,
Teresita, who now lives in Luzon and has been estranged from Moreno since the 1980s, was a
signatory in the deed of sale. Thirdly, a certain Veronida Padilla, a fictitious person, also signed the
deed of sale as among the vendors, but she, too, was impleaded as a co-defendant in the ejectment
suit. Fourthly, the deed was only registered the following year after its supposed execution.

The respondents insisted that the Heirs of Vicente, who had allegedly sold the subject lot to
Carmencita, had never physically occupied the same. Hence, there was no basis at all for
Carmencitas claim that the respondents possession of the subject lot was by mere tolerance of the
alleged owners.

The respondents also presented before the CA a newly discovered evidence, which they found in an
old wooden chest in their ancestral home. A duly notarized document captioned as an
"Agreement,"23 dated February 23, 1957, showed that Vicente and his spouse, Dionesia, had waived
their hereditary rights to Lot No. 1907-A. The document stated that Vicente obtained a loan from the
Philippine National Bank using Lot No. 1907-A as a collateral. The loan was paid by Carlos and
Asuncion and the waiver must have been executed in order to be fair to Vicentes siblings.
Prescinding from the above, the Heirs of Vicente no longer had ownership rights over the subject lot
to convey to Carmencita.

The respondents also averred that Carmencitas complaint lacked a cause of action. The certification
to file an action was issued by the officials of Barangay Duljo in the name of James Tan Suarez,
Carmencitas brother, who had no real rights or interests over the subject lot. Further, while
Carmencita based her claim over the subject lot by virtue of a deed of sale executed on April 1,
2004, no demand to vacate was made upon the respondents after that date. The absence of such
demand rendered the complaint fatally defective, as the date of its service should be the reckoning
point of the one-year period within which the suit can be filed.

In support of the respondents prayer for the issuance of injunctive reliefs, they argued that their loss
would be irreparable. Moreover, the resolution of the respondents petition for nullification of the
partition of Lot No. 1907-A, in which Carmencita was likewise impleaded as a defendant, would be
rendered useless in the event that the latters complaint for unlawful detainer would be granted and
the formers ancestral house demolished.

The Ruling of the CA

On March 19, 2009, the CA rendered the herein assailed Decision reversing the disquisitions of the
courts a quo and dismissing Carmencitas complaint for unlawful detainer. The CA explained:

Section 1, Rule 70 of the Rules of Court provides:

Section 1. Who may institute proceedings, and when.Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom
the possession of any land or building is unlawfully withheld after the expiration or termination of the
right to hold possession, by virtue of any contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person, may, at any time within one (1) year
after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal
Trial Court against the person or persons unlawfully withholding or depriving of possession, or any
 Page 9 of 68

person or persons claiming under them, for the restitution of such possession, together with
damages and costs.

The distinction between forcible entry and unlawful detainer was lucidly explained in Sarmiento vs.
Court of Appeals,:

Forcible entry and unlawful detainer cases are two distinct actions defined in Section 1, Rule 70 of
the Rules of Court. [In] forcible entry, one is deprived of physical possession of land or building by
means of force, intimidation, threat, strategy, or stealth. In unlawful detainer, one unlawfully
withholds possession thereof after the expiration or termination of his right to hold possession under
any contract, express or implied. In forcible entry, the possession is illegal from the beginning and
the basic inquiry centers on who has the prior possession de facto. In unlawful detainer, the
possession was originally lawful but became unlawful by the expiration or termination of the right to
possess, hence the issue of rightful possession is decisive for, in such action, the defendant is in
actual possession and the plaintiffs cause of action is the termination of the defendants right to
continue in possession.

What determines the cause of action is the nature of defendants entry into the land. If the entry is
illegal, then the action which may be filed against the intruder within one (1) year therefrom is
forcible entry. If, on the other hand, the entry is legal but the possession thereafter became illegal,
the case is one of unlawful detainer which must be filed within one (1) year from the date of the last
demand.

A close perusal of [Carmencitas] complaint a quo reveals that the action was neither one of forcible
entry nor unlawful detainer but essentially involved an issue of ownership which must be resolved in
an accion reivindicatoria. It did not characterize [the respondents] alleged entry into the land:
whether the same was legal or illegal. It did not state how [the respondents] entered the land and
constructed a house thereon. It was also silent on whether [the respondents] possession became
legal before [Carmencita] demanded from them to vacate the land. The complaint merely averred
that their relatives previously owned the lot [the respondents] were occupying and that after
[Carmencita] purchased it[,] she, as its new owner, demanded [for the respondents] to vacate the
land. Moreover, it is undisputed that [the respondents] and their ancestors have been occupying the
land for several decades already. There was no averment as to how or when [Carmencitas]
predecessors tolerated [the respondents] possession of the land. Consequently, there was no
contract to speak of, whether express or implied, between [the respondents], on one hand, and
[Carmencita] or her predecessors, on the other, as would qualify [the respondents] possession of
the land as a case of unlawful detainer. Neither was it alleged that [the respondents] took
possession of the land through force, intimidation, threat, strategy or stealth to make out a case of
forcible entry. In any event, [Carmencita] cannot legally assert that [the respondents] possession of
the land was by mere tolerance. This is because [Carmencitas] predecessors-in-interest did not yet
own the property when [Claudia] took possession thereof. Take note that [Carmencitas]
predecessors-in-interest merely stepped into the shoes of their parents who were also co-heirs of
[Claudia]. Finally, to categorize a cause of action as one constitutive of unlawful detainer, plaintiffs
supposed acts of tolerance must have been present from the start of the possession which he later
seek[s] to recover. This is clearly wanting in the case at bar.

Indeed, when the complaint fails to aver facts constitutive of forcible entry or unlawful detainer, as
where it does not state how entry was effected or how and when dispossession started, as in the
case at bar, the remedy should either be an accion publiciana or an accion reivindicatoria in the
proper RTC. If [Carmencita] is truly the owner of the subject property and she was unlawfully
deprived of the real right of possession or ownership thereof, she should present her claim before
 Page 10 of 68

the RTC in an accion publiciana or an accion reivindicatoria, and not before the municipal trial court
in a summary proceeding of unlawful detainer or forcible entry.

Munoz vs. Court of Appeals enunciated:

For even if he is the owner, possession of the property cannot be wrested from another who had
been in possession thereof for more than twelve (12) years through a summary action for ejectment.
Although admittedly[,] petitioner may validly claim ownership based on the muniments of title it
presented, such evidence does not responsibly address the issue of prior actual possession raised
in a forcible entry case. It must be stated that regardless of actual condition of the title to the
property, the party in peaceable quiet possession shall not be turned out by a strong hand, violence
or terror. Thus, a party who can prove prior possession can recover such possession even against
the owner himself. Whatever may be the character of his prior possession, if he has in his favor
priority in time, he has the security that entitles him to remain on the property until he is lawfully
ejected by a person having a better right by accion publiciana or accion reivindicatoria.24 (Citations
omitted and underscoring supplied)

In Carmencitas Motion for Reconsideration25 filed before the CA, she alleged that the case of
Sarmiento cited by the respondents is not applicable to the present controversy since it involves a
boundary dispute, which is properly the subject of an accion reivindicatoria and over which the
MTCC has no jurisdiction. She claimed that Rivera v. Rivera26 finds more relevance in the case at
bar. In Rivera, the contending parties were each others relatives and the Court ruled that in an
unlawful detainer case, prior physical possession by the complainant is not necessary.27Instead, what
is required is a better right of possession. Further, the MTCC cannot be divested of jurisdiction just
because the defendants assert ownership over the disputed property.

In the herein assailed Resolution dated May 5, 2009, the CA denied Carmencitas Motion for
Reconsideration.

In essence, the instant petition presents the following issues:

Whether or not Carmencitas complaint against the respondents had sufficiently alleged and proven
a cause of action for unlawful detainer.

II

Whether or not the pendency of the respondents petition for nullification of partition of Lot No. 1907-
A and for the issuance of new certificates of title can abate Carmencitas ejectment suit.

Carmencitas Allegations

In support of the petition, Carmencita reiterates that she purchased the subject lot from the Heirs of
Vicente, who were then the registered owners thereof. At the time of the sale, respondents Felix and
Marilou were occupying the subject lot. Thus, Atty. Pareja, in Carmencitas behalf, demanded that
they vacate the property. The respondents refusal to comply with the demand turned them into
deforciants unlawfully withholding the possession of the subject lot from Carmencita, the new owner,
whose recourse was to file a complaint for unlawful detainer.
 Page 11 of 68

Further, Carmencita insists that a certificate of title shall not be subject to a collateral attack28 and the
issue of ownership cannot be resolved in an action for unlawful detainer. A pending suit involving the
question of ownership of a piece of real property will not abate an ejectment complaint as the two
are not based on the same cause of action and are seeking different reliefs.29

Additionally, Carmencita invokes the doctrine in Eastern Shipping Lines, Inc. v. CA30 that the
registered owner of a property is entitled to its possession. In Arcal v. CA,31 the Court also explained
that the occupation of a property not by its registered owner but by others depends on the formers
tolerance, and the occupants are bound by an implied promise to vacate upon demand, failing at
which, a suit for ejectment would be proper.32

The RespondentsArguments

In their Comment33 to the instant petition, the respondents stress that Carmencitas complaint for
unlawful detainer was fundamentally inadequate. There was practically no specific averment as to
when and how possession by tolerance of the respondents began. In the complaint, Carmencita
made a general claim that the respondents possessed "the property by mere tolerance with the
understanding that they would voluntarily vacate the premises and remove their house(s) thereon
upon demand by the owners."34 In Spouses Valdez, Jr. v. CA,35 the Court ruled that the failure of the
complainants to allege key jurisdictional facts constitutive of unlawful detainer is fatal and deprives
the MTCC of jurisdiction over the action.

In their rejoinder,36 the respondents likewise argue that the issues of possession and ownership are
inseparably linked in the case at bar. Carmencitas complaint for ejectment was based solely on her
spurious title, which is already the subject of the respondents petition for nullification of partition of
Lot No. 1907-A.

Our Disquisition

The instant petition lacks merit.

Carmencita had not amply alleged and proven that all the requisites for unlawful detainer are present
in the case at bar.

"Without a doubt, the registered owner of real property is entitled to its possession. However, the
owner cannot simply wrest possession thereof from whoever is in actual occupation of the property.
To recover possession, he must resort to the proper judicial remedy and, once he chooses what
action to file, he is required to satisfy the conditions necessary for such action to prosper."37

In Spouses Valdez, Jr.,38 the Court is instructive anent the three kinds of actions available to recover
possession of real property, viz:

(a) accion interdictal; (b) accion publiciana; and (c) accion reivindicatoria.

Accion interdictal comprises two distinct causes of action, namely, forcible entry (detentacion) and
unlawful detainer (desahuico) [sic]. In forcible entry, one is deprived of physical possession of real
property by means of force, intimidation, strategy, threats, or stealth whereas in unlawful detainer,
one illegally withholds possession after the expiration or termination of his right to hold possession
under any contract, express or implied. The two are distinguished from each other in that in forcible
entry, the possession of the defendant is illegal from the beginning, and that the issue is which party
 Page 12 of 68

has prior de facto possession while in unlawful detainer, possession of the defendant is originally
legal but became illegal due to the expiration or termination of the right to possess.

The jurisdiction of these two actions, which are summary in nature, lies in the proper municipal trial
court or metropolitan trial court. Both actions must be brought within one year from the date of actual
entry on the land, in case of forcible entry, and from the date of last demand, in case of unlawful
detainer. The issue in said cases is the right to physical possession.

Accion publiciana is the plenary action to recover the right of possession which should be brought in
the proper regional trial court when dispossession has lasted for more than one year. It is an
ordinary civil proceeding to determine the better right of possession of realty independently of title. In
other words, if at the time of the filing of the complaint more than one year had elapsed since
defendant had turned plaintiff out of possession or defendants possession had become illegal, the
action will be, not one of the forcible entry or illegal detainer, but an accion publiciana. On the other
hand, accion reivindicatoria is an action to recover ownership also brought in the proper regional trial
court in an ordinary civil proceeding.39 (Citations omitted)

In a complaint for unlawful detainer, the following key jurisdictional facts must be alleged and
sufficiently established:

(1)initially, possession of property by the defendant was by contract with or by tolerance of

the plaintiff;

(2)eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination of the latters right of possession;

(3)thereafter, the defendant remained in possession of the property and deprived the plaintiff
of the enjoyment thereof; and

(4)within one year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.40

In the case at bar, the first requisite mentioned above is markedly absent. Carmencita failed to
clearly allege and prove how and when the respondents entered the subject lot and constructed a
house upon it.41 Carmencita was likewise conspicuously silent about the details on who specifically
permitted the respondents to occupy the lot, and how and when such tolerance came
about.42 Instead, Carmencita cavalierly formulated a legal conclusion, sans factual substantiation,
that (a) the respondents initial occupation of the subject lot was lawful by virtue of tolerance by the
registered owners, and (b) the respondents became deforciants unlawfully withholding the subject
lots possession after Carmencita, as purchaser and new registered owner, had demanded for the
former to vacate the property.43 It is worth noting that the absence of the first requisite assumes even
more importance in the light of the respondents claim that for decades, they have been occupying
the subject lot as owners thereof.

Again, this Court stresses that to give the court jurisdiction to effect the ejectment of an occupant or
deforciant on the land, it is necessary that the complaint must sufficiently show such a statement of
facts as to bring the party clearly within the class of cases for which the statutes provide a remedy,
without resort to parol testimony, as these proceedings are summary in nature. In short, the
jurisdictional facts must appear on the face of the complaint. When the complaint fails to aver facts
constitutive of forcible entry or unlawful detainer, as where it does not state how entry was effected
or how and when dispossession started, the remedy should either be an accion publiciana or accion
reivindicatoria.44
 Page 13 of 68

As an exception to the general rule, the respondents petition for nullification of the partition of Lot
No. 1907-A can abate Carmencitas suit for unlawful detainer.

In Amagan, the Court is emphatic that:

As a general rule, therefore, a pending civil action involving ownership of the same property does not
justify the suspension of ejectment proceedings. "The underlying reasons for the above ruling were
that the actions in the Regional Trial Court did not involve physical or de facto possession, and, on
not a few occasions, that the case in the Regional Trial Court was merely a ploy to delay disposition
of the ejectment proceeding, or that the issues presented in the former could quite as easily be set
up as defenses in the ejectment action and there resolved."

Only in rare instances is suspension allowed to await the outcome of the pending civil action. One
such exception is Vda. de Legaspi v. Avendao, wherein the Court declared:

"x x x. Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible
entry, and the right of the plaintiff to recover the premises is seriously placed in issue in a proper
judicial proceeding, it is more equitable and just and less productive of confusion and disturbance of
physical possession, with all its concomitant inconvenience and expenses. For the Court in which
the issue of legal possession, whether involving ownership or not, is brought to restrain, should a
petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful
detainer case in order to await the final judgment in the more substantive case involving legal
possession or ownership. It is only where there has been forcible entry that as a matter of public
policy the right to physical possession should be immediately set at rest in favor of the prior
possession regardless of the fact that the other party might ultimately be found to have superior
claim to the premises involved, thereby to discourage any attempt to recover possession thru force,
strategy or stealth and without resorting to the courts."

xxxx

Indisputably, the execution of the MCTC Decision would have resulted in the demolition of the house
subject of the ejectment suit; thus, by parity of reasoning, considerations of equity require the
suspension of the ejectment proceedings. We note that, like Vda. de Legaspi, the respondents suit
is one of unlawful detainer and not of forcible entry. And most certainly, the ejectment of petitioners
would mean a demolition of their house, a matter that is likely to create the "confusion, disturbance,
inconveniences and expenses" mentioned in the said exceptional case.

Necessarily, the affirmance of the MCTC Decision would cause the respondent to go through the
whole gamut of enforcing it by physically removing the petitioners from the premises they claim to
have been occupying since 1937. (Respondent is claiming ownership only of the land, not of the
house.) Needlessly, the litigants as well as the courts will be wasting much time and effort by
proceeding at a stage wherein the outcome is at best temporary, but the result of enforcement is
permanent, unjust and probably irreparable.

We should stress that respondents claim to physical possession is based not on an expired or a
violated contract of lease, but allegedly on "mere tolerance." Without in any way prejudging the
proceedings for the quieting of title, we deem it judicious under the present exceptional
circumstances to suspend the ejectment case.45 (Citations omitted)

The Court then quoted with favor the following portion of the Decision dated July 8, 1997, penned by
Associate Justice Artemio G. Tuquero in CA-G.R. No. 43611-SP, from which the Amagan case
sprang:
 Page 14 of 68

"ONE. Private respondent Teodorico T. Marayag anchors his action for unlawful detainer on the
theory that petitioners possession of the property in question was by mere tolerance. However, in
answer to his demand letter dated April 13, 1996 x x x, petitioners categorically denied having any
agreement with him, verbal or written, asserting that they are owners of the premises we are
occupying at 108 J.P. Rizal Street, San Vicente, Silang, Cavite. In other words, it is not merely
physical possession but ownership as well that is involved in this case.["]

"TWO. In fact, to protect their rights to the premises in question, petitioners filed an action for
reconveyance, quieting of title and damages against private respondents, docketed as Civil Case
No. TG-1682 of the Regional Trial Court, Branch 18, Tagaytay City. The issue of ownership is
squarely raised in this action. Undoubtedly, the resolution of this issue will be determinative of who is
entitled to the possession of the premises in question.["]

"THREE. The immediate execution of the judgment in the unlawful detainer case will include the
removal of the petitioners house [from] the lot in question.["]

"To the mind of the Court it is injudicious, nay inequitable, to allow demolition of petitioners house
prior to the determination of the question of ownership [of] the lot on which it stands."46 (Citation
omitted)

We find the doctrines enunciated in Amagan squarely applicable to the instant petition for reasons
discussed hereunder.

Carmencitas complaint for unlawful detainer is anchored upon the proposition that the respondents
have been in possession of the subject lot by mere tolerance of the owners. The respondents, on the
other hand, raise the defense of ownership of the subject lot and point to the pendency of Civil Case
No. CEB-30548, a petition for nullification of the partition of Lot No. 1907-A, in which Carmencita and
the Heirs of Vicente were impleaded as parties. Further, should Carmencitas complaint be granted,
the respondents house, which has been standing in the subject lot for decades, would be subject to
demolition. The foregoing circumstances, thus, justify the exclusion of the instant petition from the
purview of the general rule.

All told, we find no reversible error committed by the CA in dismissing Carmencita's complaint for
unlawful detainer. As discussed above, the jurisdictional requirement of possession by mere
tolerance of the owners had not been amply alleged and proven. Moreover, circumstances exist
which justify the abatement of the ejectment proceedings. Carmencita can ventilate her ownership
claims in an action more suited for the purpose. The respondents, on other hand, need not be
exposed to the risk of having their house demolished pending the resolution of their petition for
nullification of the partition of Lot No. 1907-A, where ownership over the subject lot is likewise
presented as an issue.

IN VIEW OF THE FOREGOING, the instant petition is DENIED.

The Decision rendered on March 19, 2009 and Resolution issued on May 5, 2009 by the Court of
Appeals in CA-G.R. SP No. 03489 are AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice
 Page 15 of 68

G.R. No. 183822 January 18, 2012

RUBEN C. CORPUZ, represented by Attorney-in-Fact Wenifreda C. Agullana, Petitioner,

vs.
Sps. HILARION AGUSTIN and JUSTA AGUSTIN, Respondents.

DECISION

SERENO, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court assails the Decision1 dated
08 January 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 90645, which affirmed the
Decision of the Regional Trial Court (RTC) of Laoag City and its Resolution2 dated 15 July 2008
denying the Motion for Reconsideration. The RTC, in the exercise of its appellate jurisdiction,
affirmed the Decision of the Municipal Trial Court (MTC) of Laoag City, which had dismissed the
unlawful detainer case filed by herein petitioner.

The Factual Antecedents

The Court adopts the findings of fact of the CA as follows:

Ruben C. Corpuz (Ruben) filed a complaint for ejectment against Spouses Hilarion and Justa
Agustin on the allegation that he is the registered owner of two parcels of land located in Santa
Joaquina, Laoag City covered by TCT No. 12980 issued on October 29, 1976 by the Laoag City
Register of Deeds and with technical descriptions as follows:

1) A parcel of land (Lot No. 20 of the Cadastral Survey of Laoag), with improvements
thereon, situated in the barrio of Santa Joaquina, Municipality of Laoag. Bounded x x x
containing an area of five thousand seven hundred and fifty nine (5,759) square meters more
or less x x x.

2) A parcel of land (Lot No. 11711 of the Cadastral Survey of Laoag), with the improvements
thereon, situated in the barrio of Santa Joaquina, Municipality of Laoag. Bounded x x x,
containing an area of twenty thousand seven hundred and forty five (20,745) square meters,
more or less x x x.

Aforesaid parcels of land were formerly owned by Elias Duldulao in whose name Original Certificate
of Title No. O-1717 was issued. Duldulao sold said properties on August 27, 1951 to Francisco D.
Corpuz, father of Ruben C. Corpuz. The elder Corpuz allowed spouses Agustin to occupy subject
properties, the latter being relatives.

Despite demand to vacate, the Agustins refused to leave the premises.

Ruben alleged further that he has the better right to possess subject property having acquired the
same from his father, Francisco, who executed a Deed of Quitclaim in his favor on March 15, 1971.

Spouses Agustin, in their Answer, interposed the defense that on June 5, 1971 Francisco Corpuz,
Ruben's father, disposed of subject property by executing a Deed of Absolute Sale in their favor for a
consideration of Eleven Thousand One Hundred Fifty Pesos (P11,150.00).

The Municipal Trial Court found for the spouses Agustin and dismissed the complaint.
 Page 16 of 68

In sum, considering the evidence of the defendants which shows that they entered into and occupied
Lot No. 20 and the 9,657 sq. m. portion of Lot No. 11711 as buyers or owners, disproving the
allegation of the plaintiff that defendants were merely allowed by Francisco Corpuz to occupy the
subject properties, being his relatives, and considering further the length of time that the defendants
have been in possession, as owners, of Lot No. 20 and the 9,657 sq. m. portion of Lot No. 11711,
and have been continuously exercising their rights of ownership thereon, this court is of the view and
holds, in so far as this case is concerned, that the defendants are the ones entitled to the possession
of Lot No. 20 and the 9,657 sq. m. portion of Lot No. 11711.

WHEREFORE, premises considered, this case, is hereby dismissed.

SO ORDERED.

On appeal, Branch XVI, Regional Trial Court of Laoag City affirmed said dismissal, the dispositive
portion of said decision states:

"WHEREFORE, premises considered, the Appeal is hereby DISMISSED for lack of merit and the
JUDGMENT of the Municipal Trial Court in Cities, Branch 01, Laoag City is hereby AFFIRMED, with
costs against the plaintiff-appellant.

SO ORDERED.3

Petitioner assailed the Decision of the RTC, affirming the earlier dismissal of the case by the MTC,
by instituting an appeal with the CA. On 08 January 2008, the appellate court through its Fourteenth
Division dismissed his appeal.4It noted that his father engaged in a double sale when he conveyed
the disputed properties to petitioner and respondents. The Quitclaim executed by the elder Corpuz in
favor of petitioner was dated 15 March 1971, while the Deed of Sale with respondents was later, on
15 June 1971; both documents were notarized shortly after their execution.5 The Quitclaim, which
was subsequently inscribed at the back of Original Certificate of Title (OCT) No. O-1717 on 29
October 1976,6 resulted in the issuance of Transfer Certificate of Title (TCT) No. T-12980 in the
name of petitioner. The Deed of Sale executed with respondents was, however, not annotated at the
back of OCT No. O-1717 and remained unregistered.7

Based on the above findings, the CA ruled that petitioner had knowledge of the sale of the disputed
real property executed between Francisco Corpuz, petitioner's father, and respondents. Due to this
conveyance by the elder Corpuz to respondents, the latter's possession thereof was in the nature of
ownership. Thus, in the context of an unlawful detainer case instituted by petitioner against
respondents, the appellate court concluded that respondents possession of the property was not by
mere tolerance of its former owner petitioner's father but was in the exercise of ownership.8

The CA noted that petitioner had knowledge of his fathers sale of the properties to respondents as
early as 1973. However, despite knowledge of the sale, petitioner failed to initiate any action to annul
it and oust respondents from the subject properties.9 The appellate court rejected his contention that,
as registered owner of the disputed properties, he had a better right to possession thereof,
compared to the unregistered Deed of Sale relied upon by respondents in their defense of the same
properties. The CA ruled that the inaction on his part despite knowledge of the sale in 1973 was
equivalent to registration of respondents unregistered deed.10 In dismissing his appeal, the
CA concluded that respondents possession was "not ... anchored on mere tolerance nor on any of
the grounds for forcible entry or unlawful detainer"; hence "the complaint for ejectment must
fail."11 The dispositive portion of the assailed Decision reads:
 Page 17 of 68

WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED. The decision of
Branch XVI, Regional Trial Court of Laoag City in Civil Case No. 13293-16 is hereby AFFIRMED.

SO ORDERED.12

The Issues

Petitioner assigns the following errors in this Petition for Review on Certiorari:

I. THE HONORABLE COURT of appeals seriously erred in failing to consider the legal
ownership of petitioner on the disputed property to claim better right to possession.

II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN THE APPRECIATION

OF THE ALLEGED SALE IN FAVOR OF RESPONDENTS TO RULE THAT THEY HAVE
BETTER RIGHT TO POSSESSION.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO

CONSIDER THE CASE OF JACINTO CO VS. MILITAR, ET AL. (421 SCRA 455) WHICH IS
SIMILAR TO THE INSTANT CASE.

IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN DENYING THE

PETITION FOR REVIEW RAISED BEFORE IT.13

Petitioner presents to this Court for resolution the core issue of his Petition: who between the parties
has the right to possession of the disputed properties -- petitioner, who is the registered owner under
TCT No. T-12980; or respondents, who have a notarized yet unregistered Deed of Absolute Sale
over the same properties?

The Court's Ruling

We DENY the Petition.

Although this case does not present a novel question of law, there is a need to discuss the nature of
an ejectment case for the recovery of physical possession in relation to the Torrens system. A
resolution of the issue would be relevant to the determination of who has the better right to
possession in this unlawful detainer case.

One of the three kinds of action for the recovery of possession of real property is "accion
interdictal, or an ejectment proceeding ... which may be either that for forcible entry (detentacion) or
unlawful detainer (desahucio), which is a summary action for the recovery of physical possession
where the dispossession has not lasted for more than one year, and should be brought in the proper
inferior court."14 In ejectment proceedings, the courts resolve the basic question of who is entitled to
physical possession of the premises, possession referring to possession de facto, and not
possession de jure.15

Where the parties to an ejectment case raise the issue of ownership, the courts may pass upon that
issue to determine who between the parties has the better right to possess the property. However,
where the issue of ownership is inseparably linked to that of possession, adjudication of the
ownership issue is not final and binding, but only for the purpose of resolving the issue of
possession. The adjudication of the issue of ownership is only provisional, and not a bar to an action
between the same parties involving title to the property.16
 Page 18 of 68

In the instant case, the position of respondents is that they are occupying the disputed properties as
owners, having acquired these from petitioner's father through a Deed of Absolute Sale executed in
1971. Respondents believe that they cannot be dispossessed of the disputed properties, since they
are the owners and are in actual possession thereof up to this date. Petitioner, however, rebuts this
claim of ownership, contending that he has registered the disputed properties in his name and has
been issued a land title under the Torrens system. He asserts that, having registered the properties
in his name, he is the recognized owner and consequently has the better right to possession.

Indeed, a title issued under the Torrens system is entitled to all the attributes of property ownership,
which necessarily includes possession.17 Petitioner is correct that as a Torrens title holder over the
subject properties, he is the rightful owner and is entitled to possession thereof. However, the lower
courts and the appellate court consistently found that possession of the disputed properties by
respondents was in the nature of ownership, and not by mere tolerance of the elder Corpuz. In fact,
they have been in continuous, open and notorious possession of the property for more than 30 years
up to this day.

Petitioner cites Jacinto Co v. Rizal Militar, et al.,18 which has facts and legal issues identical to those
of the instant case. The petitioner therein filed an unlawful detainer case against the respondents
over a disputed property. He had a Torrens title thereto, while the respondents as actual occupants
of the property claimed ownership thereof based on their unregistered Deeds of Sale. The principal
issue was who between the two parties had the better right to possess the subject property.

This Court resolved the issue by upholding the title holder as the one who had the better right to
possession of the disputed property based on the following justification:

We have, time and again, held that the only issue for resolution in an unlawful detainer case is
physical or material possession of the property involved, independent of any claim of ownership by
any of the party litigants. Moreover, an ejectment suit is summary in nature and is not susceptible to
circumvention by the simple expedient of asserting ownership over the property.

In forcible entry and unlawful detainer cases, even if the defendant raises the question of ownership
in his pleadings and the question of possession cannot be resolved without deciding the issue of
ownership, the lower courts and the Court of Appeals, nonetheless, have the undoubted
competence to provisionally resolve the issue of ownership for the sole purpose of determining the
issue of Possession.

Such decision, however, does not bind the title or affect the ownership of the land nor is conclusive
of the facts therein found in a case between the same parties upon a different cause of action
involving possession.

In the instant case, the evidence showed that as between the parties, it is the petitioner who has a
Torrens Title to the property. Respondents merely showed their unregistered deeds of sale in
support of their claims. The Metropolitan Trial Court correctly relied on the transfer certificate of title
in the name of petitioner.

In Tenio-Obsequio v. Court of Appeals, it was held that the Torrens System was adopted in this
country because it was believed to be the most effective measure to guarantee the integrity of land
titles and to protect their indefeasibility once the claim of ownership is established and recognized.

It is settled that a Torrens Certificate of title is indefeasible and binding upon the whole world unless
and until it has been nullified by a court of competent jurisdiction. Under existing statutory and
 Page 19 of 68

decisional law, the power to pass upon the validity of such certificate of title at the first instance
properly belongs to the Regional Trial Courts in a direct proceeding for cancellation of title.

As the registered owner, petitioner had a right to the possession of the property, which is one of the
attributes of his ownership. Respondents' argument that petitioner is not an innocent purchaser for
value and was guilty of bad faith in having the subject land registered in his name is a collateral
attack on the title of petitioner, which is not allowed. A certificate of title cannot be subject to a
collateral attack and can be altered, modified or cancelled only in a direct proceeding in accordance
with law. 19

The pronouncement in Co v. Militar was later reiterated in Spouses Pascual v. Spouses

Coronel20 and in Spouses Barias v. Heirs of Bartolome Boneo, et al.,21 wherein we consistently held
the age-old rule "that the person who has a Torrens Title over a land is entitled to possession
thereof."22

However, we cannot lose sight of the fact that the present petitioner has instituted an unlawful
detainer case against respondents. It is an established fact that for more than three decades, the
latter have been in continuous possession of the subject property, which, as such, is in the concept
of ownership and not by mere tolerance of petitioners father. Under these circumstances, petitioner
cannot simply oust respondents from possession through the summary procedure of an ejectment
proceeding.

Instructive on this matter is Carbonilla v. Abiera,23 which reads thus:

Without a doubt, the registered owner of real property is entitled to its possession. However, the
owner cannot simply wrest possession thereof from whoever is in actual occupation of the property.
To recover possession, he must resort to the proper judicial remedy and, once he chooses what
action to file, he is required to satisfy the conditions necessary for such action to prosper.

In the present case, petitioner opted to file an ejectment case against respondents. Ejectment
casesforcible entry and unlawful detainerare summary proceedings designed to provide
expeditious means to protect actual possession or the right to possession of the property
involved. The only question that the courts resolve in ejectment proceedings is: who is entitled to the
physical possession of the premises, that is, to the possession de facto and not to the possession de
jure. It does not even matter if a partys title to the property is questionable. For this reason, an
ejectment case will not necessarily be decided in favor of one who has presented proof of ownership
of the subject property. Key jurisdictional facts constitutive of the particular ejectment case filed must
be averred in the complaint and sufficiently proven.

The statements in the complaint that respondents possession of the building was by mere tolerance
of petitioner clearly make out a case for unlawful detainer. Unlawful detainer involves the persons
withholding from another of the possession of the real property to which the latter is entitled, after the
expiration or termination of the formers right to hold possession under the contract, either expressed
or implied.

A requisite for a valid cause of action in an unlawful detainer case is that possession must be
originally lawful, and such possession must have turned unlawful only upon the expiration of the right
to possess. It must be shown that the possession was initially lawful; hence, the basis of such lawful
possession must be established. If, as in this case, the claim is that such possession is by mere
tolerance of the plaintiff, the acts of tolerance must be proved. (Emphasis supplied.)
 Page 20 of 68

In this case, petitioner has not proven that respondents continued possession of the subject
properties was by mere tolerance of his father, except by a mere allegation thereof. In fact, petitioner
has not established when respondents possession of the properties became unlawful a requisite
for a valid cause of action in an unlawful detainer case.

In Canlas v. Tubil,24 we enumerated the elements that constitute the sufficiency of a complaint for
unlawful detainer, as follows:

Well-settled is the rule that what determines the nature of the action as well as the court which has
jurisdiction over the case are the allegations in the complaint. In ejectment cases, the complaint
should embody such statement of facts as to bring the party clearly within the class of cases for
which the statutes provide a remedy, as these proceedings are summary in nature. The complaint
must show enough on its face to give the court jurisdiction without resort to parol evidence.

Unlawful detainer is an action to recover possession of real property from one who illegally withholds
possession after the expiration or termination of his right to hold possession under any contract,
express or implied. The possession of the defendant in unlawful detainer is originally legal but
became illegal due to the expiration or termination of the right to possess.

An unlawful detainer proceeding is summary in nature, jurisdiction of which lies in the proper
municipal trial court or metropolitan trial court. The action must be brought within one year from the
date of last demand and the issue in said case is the right to physical possession.

... ... ...

In Cabrera v. Getaruela, the Court held that a complaint sufficiently alleges a cause of action for
unlawful detainer if it recites the following:

(1) initially, possession of property by the defendant was by contract with or by tolerance of
the plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the
termination of the latters right of possession;

(3) thereafter, the defendant remained in possession of the property and deprived the plaintiff
of the enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the plaintiff
instituted the complaint for ejectment.

Based on the above, it is obvious that petitioner has not complied with the requirements sufficient to
warrant the success of his unlawful detainer Complaint against respondents. The lower courts and
the CA have consistently upheld the entitlement of respondents to continued possession of the
subject properties, since their possession has been established as one in the concept of ownership.
Thus, the courts correctly dismissed the unlawful detainer case of petitioner.

We concur in the appellate courts findings that petitioners father engaged in a double sale of the
disputed properties. The records of the case show that it took petitioner more or less five years from
1971 when he acquired the property from his father to 1976 when petitioner registered the
conveyance and caused the issuance of the land title registered in his name under the Torrens
 Page 21 of 68

system. Respondents, on the other hand, continued their possession of the properties, but without
bothering to register them or to initiate any action to fortify their ownership.

We cannot, however, sustain the appellate courts conclusion that petitioner's failure to initiate any
action to annul the sale to respondents and oust them from the disputed properties had the effect of
registration of respondents unregistered Deed of Absolute Sale. We held thus in Ruiz, Sr. v. Court
of Appeals 25:

(But) where a party has knowledge of a prior existing interest which is unregistered at that time he
acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of
registration as to him. Knowledge of an unregistered sale is equivalent to registration. As held in
Fernandez v. Court of Appeals [189 SCRA 780 (1990)],

Section 50 of Act No. 496 (now Sec. 51 of P.D. 1529), provides that the registration of the deed is
the operative act to bind or affect the land insofar as third persons are concerned. But where the
party has knowledge of a prior existing interest which is unregistered at the time he acquired a right
to the same land, his knowledge of that prior unregistered interest has the effect of registration as to
him. The Torrens system cannot be used as a shield for the commission of fraud (Gustillo v.
Maravilla, 48 Phil. 442). [Emphasis supplied.]

In this case, the Quitclaim executed by the elder Corpuz in favor of petitioner was executed ahead of
the Deed of Sale of respondents. Thus, the sale of the subject properties by petitioners father to
respondents cannot be considered as a prior interest at the time that petitioner came to know of the
transaction.

We also note that, based on the records, respondents do not dispute the existence of TCT No. T-
12980 registered in the name of petitioner. They allege, though, that the land title issued to him was
an "act of fraud" 26 on his part. We find this argument to be equivalent to a collateral attack against
the Torrens title of petitioner an attack we cannot allow in the instant unlawful detainer case. 1wphi1

It is settled in jurisprudence that a Torrens certificate of title cannot be the subject of collateral
attack.27 Such attack must be direct and not by a collateral proceeding.28 It is a well-established
doctrine that the title represented by the certificate cannot be changed, altered, modified, enlarged,
or diminished in a collateral proceeding.29 Considering that this is an unlawful detainer case wherein
the sole issue to be decided is possession de facto rather than possession de jure, a collateral
attack by herein respondents on petitioner's title is proscribed.

Our ruling in the present case is only to resolve the issue of who has the better right to possession in
relation to the issue of disputed ownership of the subject properties. Questions as to the validity of
petitioner's Torrens title can be ventilated in a proper suit instituted to directly attack its validity, an
issue that we cannot resolve definitively in this unlawful detainer case.

WHEREFORE, in view of the foregoing, we deny the instant Petition for lack of merit. The Decisions
1w phi1

of the Court of Appeals in CA-G.R. SP No. 90645 (dated January 08, 2008), of the Regional Trial
Court of Laoag City in Civil Case No. 3111-13293-65, as well as of the Municipal Trial Court of
Laoag City in Civil Case No. 3111 -- all dismissing the unlawful detainer case of petitioner
are AFFIRMED.

We make no pronouncements as to attorney's fees for lack of evidence.

SO ORDERED.
 Page 22 of 68

MARIA LOURDES P. A. SERENO

Associate Justice

THIRD DIVISION

G.R. No. 204626 June 9, 2014

PAUL P. GABRIEL, JR., IRENEO C. CALWAG, THOMAS L. TINGGA-AN, and the Heirs of
JULIET B. PULKERA, Petitioners,
vs.
CARMELING CRISOLOGO, Respondent.

DECISION

MENDOZA, J.:

Assailed in this petition for review on certiorari under Rule 45 is the June 14, 2012 Decision1 of the
Court of Appeals (CA) and its November 14, 2012 Resolution2 which reversed the April 18, 201 1
Decision3 of the Regional Trial Court, Branch 6, Baguio City (RTC), and reinstated the September
15, 2009 Decision4 of the Municipal Trial Court in Cities, Branch 1, Baguio City (MTCC). in Civil Case
No. 13209, a complaint for recovery of possession.

The Facts

Records show that Carmeling Crisologo (Crisologo), represented by her attorney-in-fact, Pedro
Isican (Isican), filed her complaint5 for Recovery of Possession and/or Ownership with Damages
against Juliet B. Pulkera, Paul P. Gabriel, Ireneo C. Calwag, and Thomas L. Tingga-an (petitioners)
before the MTCC.

Crisologo alleged, among others, that she was the registered owner of two parcels of land with a
total area of approximately 2,000 square meters, described in, and covered by, two (2) certificates of
title Transfer Certificate of Title (TCT)Nos. T-13935 and T-13936;that the properties were covered
by an Assessment of Real Property; that the payments of realty taxes on the said properties were
updated; that sometime in 2006, she discovered that petitioners unlawfully entered, occupied her
properties by stealth, by force and without her prior consent and knowledge, and constructed their
houses thereon; that upon discovery of their illegal occupation, her daughter, Atty. Carmelita
Crisologo, and Isican personally went to the properties and verbally demanded that petitioners
vacate the premises and remove their structures thereon; that the petitioners begged and promised
to buy the said properties for 3,500.00 per square meter; that she gave petitioners time to produce
the said amount, but they reneged on their promise to buy them; that petitioners refused to vacate
the subject properties despite several demands; that the petitioners knew full well that the subject
premises they were occupying were titled properties but they insisted on unlawfully holding the
same; and that she was unlawfully dispossessed and displaced from the subject properties due to
petitioners illegal occupation.

On the other hand, petitioners countered that the titles of Crisologo were products of Civil
Registration Case No. 1, Record 211, which were declared void by the Supreme Court in Republic v.
Marcos,6 and reiterated in Republic v. Marcos;7 that the said case was later enacted into law,
Presidential Decree (P.D.)No. 1271, entitled "An Act Nullifying Decrees of Registration and
Certificates of Title within the Baguio Town site Reservation Case No.1, GLRO Record No. 211,
pursuant to Act No. 931, as amended, but Considering as Valid Certain Titles of Lands that are
Alienable and Disposable Under Certain Conditions and For Other Purposes" which took effect on
 Page 23 of 68

December 22, 1977; that Crisologo failed to comply with the conditions provided in Section 1 of P.D.
No. 1271 for the validation of said titles, hence, the titles were void; that petitioners had been in
open, actual, exclusive, notorious, uninterrupted, and continuous possession of the subject land, in
good faith; and that Crisologo was never in prior possession and had no valid title over the subject
land.8

MTCC Ruling

On September 15, 2009, the MTCC rendered a decision in favor of Crisologo, the dispositive portion
of which reads:

WHEREFORE, the Court renders JUDGMENT in favor of the plaintiff directing the defendants, their
heirs, assigns, representatives and/or any person acting for and in their behalves to:

a) Immediately vacate the subject properties, and to demolish/dismantle all their houses and
other structures on the properties; should defendants refuse to comply, the plaintiff may
demolish/dismantle them at the expense of the defendants;

b) Pay reasonable rentals of the use and occupation of the subject properties at Php4,000.00
per month from January 2006 for each of the defendants;

c) Pay Php20, 000.00 as attorneys fees, and

d) Costs of litigation.

SO ORDERED.

The MTCC ruled that Crisologo was the registered owner of the subject parcels of land, who, as
such, had declared these properties for taxation purposes since 1969 and regularly paid the realty
taxes thereon. It stated that with Crisologo being the owner, petitioners were illegally occupying the
land.

The MTCC added that petitioners could not question Crisologos titles over the subject parcels of
land in an ordinary civil action for recovery of possession because such defense was a collateral
attack which was prohibited under P.D. No. 1529, otherwise known as the Property Registration
Decree. Thus, it could not inquire into the intrinsic validity of Crisologos titles.

Ruling of the RTC

On April 18, 2011, the RTC reversed and set aside the decision of the MTCC. It was of the view that
petitioners assertion of the TCTs invalidity was not a collateral attack. It cited the rulings in Republic
v. Marcos,9 and Republic v. Marcos,10 which perpetually prohibited the reopening of Civil Reservation
Case No. 1, LRC Rec. No. 211, and, therefore, the registration of parcels of lands. For said reason,
the titles of Crisologo were products of illegal proceedings nullified by this Court. She also failed to
comply with the conditions set forth in P.D. No. 1271. Accordingly, the titles were void and the same
could not be a legal basis for Crisologo to justify the eviction of petitioners from the subject premises.
Having been nullified, these certificates of title ceased to be the best proof of ownership.

Ruling of the CA
 Page 24 of 68

On June 14, 2012, the CA rendered the assailed decision, setting aside the RTC decision and
reinstating that of the MTCC.

The CA held that Crisologo was entitled to the possession of the subject parcels of land. It explained
that her possession was established when she acquired the same by sale sometime in 1967 and
when the certificates of title covering the properties were subsequently issued. It added that her
payment of realty taxes due on the said properties since 1969 further strengthened her claim of
possession. Moreover, her appointment of Isican as administrator of the subject properties and her
offer to sell the lots to the petitioners showed that she had control over the same. Accordingly, the
CA concluded that Crisologos right to remain in possession of the subject lots should be preferred
over the petitioners possession regardless of the actual condition of her titles. Hence, the
petitioners, who used force in occupying her properties, should respect, restore and not disturb her
lawful possession of the subject parcels of land.

Unsatisfied with the CA decision, the petitioners instituted this petition anchored on the following

ASSIGNMENT OF ERRORS

(1)

THE HONORABLE COURT OFAPPEALS COMMITTED A REVERSIBLE ERROR IN LAW WHEN IT

RULED THAT RESPONDENT HAS ACTUAL OR WAS IN PRIOR POSSESSION OF THE LANDS
INVOLVED CONTRARY TO THE EVIDENCE, THE FACTS AND THE CIRCUMSTANCES OF THIS
CASE.

(2)

THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT

THE PURPORTED EXECUTION AND REGISTRATION OF THE PUBLIC INSTRUMENTS
RELATIVE TO THE SALE IN 1967 OF THE SUBJECT LANDS AND THE SUBSEQUENT
ISSUANCE OF THE TITLES IN HER NAME ESTABLISH POSSESSION.

(3)

THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT

THE TAX DECLARATIONS AND RECEIPTS IN THE NAME OF THE RESPONDENT ESTABLISH
HER POSSESSION OVER THE SUBJECT LOTS.

(4)

THE HONORABLE COURT OFAPPEALS COMMITTED A SERIOUS ERROR IN FINDING THAT

THE SUPPOSED APPOINTMENT OF PEDRO ISICAN AS ADMINISTRATOR ESTABLISHES HER
POSSESSION OVER THE LANDS IN DISPUTE.

(5)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT IS

THE PRESENT POSSESSOR OF THE SUBJECT LANDS REGARDLESS OF THE ACTUAL
CONDITION OF HER TITLES, IGNORING THE PRINCIPLE OF STARE DECISIS AND
ADHERENCE TO LAW.
 Page 25 of 68

(6)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS

DISTURBED THE POSSESSION OF HEREIN RESPONDENT BY FORCE.

(7)

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT

RESPONDENTSSUPPOSED POSSESSION OVER THE SUBJECT LOTS SHOULD BE
PREFERRED DESPITE THE NATURE OR CONDITION OF THE PROPERTY AS PART OF THE
PUBLIC DOMAIN.11

Petitioners position

Petitioners aver that Crisologo failed to show documentary or testimonial evidence that she acquired
the subject properties by sale or by any other mode of acquisition from its previous owner. Her only
bases in claiming them were the titles issued in her name, without a deed of sale.

Petitioners further argue that assuming that there was really a sale that took place, its execution and
registration cannot establish her right of possession, whether actual or constructive. First, the validity
of the subject titles was stricken down by Republic vs. Marcos cases and P.D. No. 1271.

Hence, the TCTs could not be sources of legal rights. Second, Crisologo never took actual
possession of the subject properties after the alleged sale in 1967. She appointed an administrator
over the said property only in 2006.

Moreover, petitioners claim that her tax declarations and receipts evidencing payment of taxes
cannot prove her possession or ownership over the subject properties without proof of actual
possession.

Finally, petitioners submit that there are facts and circumstances that militate against her claim of
possession. They point out that the titles over the subject properties have no encumbrances or
annotations whatsoever; that for more than forty (40) years, the subject lots have not been subjected
to any deed, agreement, contract, mortgage or any other property dealings; that the said titles are
not validated up to the present as certified by the Register of Deeds of Baguio City; that she
presented no witnesses to prove her intention to possess the subject lots; that the documents she
presented are not reliable because they were issued only in 2008; that no improvements were
introduced by her; and that she is guilty of laches due to her inaction to validate her titles.

Respondents position

Crisologo opposes the petition mainly on technical grounds. First, she argues that the supposed
representatives of the petitioners who filed this petition and signed the certification on non-forum
shopping have no authority to do so. Hence, they have no standing to prosecute because they are
not the real parties in interest. Second, she claims that the petitioners failed to furnish the CA a copy
of their motion for extension of time to file this petition for review.

The Courts Ruling

 Page 26 of 68

The only question that needs to be resolved in this petition is who between petitioners and
respondent Crisologo have a better right of possession over the subject parcels of land. Both
contending parties claim that they have a superior possessory right over the disputed lands.

After a careful review of the records, the Court holds that Crisologo has a better right of possession
over the subject parcels of land.

Accion Publiciana: its nature and purpose

Also known as accion plenaria de posesion, accion publiciana is an ordinary civil proceeding to
determine the better right of possession of realty independently of title. It refers to an ejectment suit
filed after the expiration of one year from the accrual of the cause of action or from the unlawful
withholding of possession of the realty.

The objective of the plaintiffs in accion publiciana is to recover possession only, not ownership.
When parties, however, raise the issue of ownership, the court may pass upon the issue to
determine who between the parties has the right to possess the property. This adjudication,
nonetheless, is not a final and binding determination of the issue of ownership; it is only for the
purpose of resolving the issue of possession, where the issue of ownership is inseparably linked to
the issue of possession. The adjudication of the issue of ownership, being provisional, is not a bar to
an action between the same parties involving title to the property. The adjudication, in short, is not
conclusive on the issue of ownership.12

In her complaint, Crisologo prayed that she be declared in prior actual possession of the properties
in dispute and that petitioners vacate the same and demolish their houses therein. She alleged,
among others, that she was the registered owner of the subject parcels of land and that petitioners
unlawfully entered her properties by stealth, force and without her prior consent and knowledge.
Clearly, she primarily wanted to recover possession of the subject parcels of land from petitioners.
Hence, the case is an accion publiciana.

Nonetheless, the petitioners have raised the issue of ownership in their pleadings. They mainly
argue that Crisologos titles on the subject properties are void and that they have been in open,
actual, exclusive, notorious, uninterrupted and continuous possession over the subject properties in
good faith.

The nullity of the decrees of registration and certificates of titles in Section 1 of P.D. No. 1271 is not
absolute

Although Section 1 of P.D. No. 127113 invalidated decrees of registration and certificates of title within
the Baguio Town site Reservation Case No. 1, GLRO Record No. 211, the nullity, however, is not
that sweeping. The said provision expressly states that "all certificates of titles issued on or before
July 31, 1973shall be considered valid and the lands covered by them shall be deemed to have been
conveyed in fee simple to the registered owners" upon 1) showing proof that the land covered by the
subject title is not within any government, public or quasi-public reservation, forest, military or
otherwise, as certified by appropriating government agencies; and 2) compliance by the titleholder
with the payment to the Republic of the Philippines of the correct assessed value of the land within
the required period.

In the case at bench, the records show that the subject parcels of land were registered on August
24, 1967. The titles are, thus, considered valid although subject to the conditions set. But whether or
not Crisologo complied with the said conditions would not matter because, this would be a collateral
attack on her registered titles, as would be discussed later.
 Page 27 of 68

At any rate, petitioners, as private individuals, are not the proper parties to question the status of the
respondents registered titles. Section 6 of P.D. No. 127114 expressly states that the "Solicitor
General shall institute such actions or suits as may be necessary to recover possession of lands
covered by all void titles not validated under this Decree."

The respondents certificates of title give her the better right to possess the subject parcels of land

It is settled that a Torrens title is evidence of indefeasible title to property in favor of the person in
whose name the title appears. It is conclusive evidence with respect to the ownership of the land
1w phi 1

described therein. It is also settled that the titleholder is entitled to all the attributes of ownership of
the property, including possession. Thus, in Arambulo v. Gungab,15 this Court declared that the "age-
old rule is that the person who has a Torrens title over a land is entitled to possession thereof."16

The records show that TCT No. T-1393517 and TCT No. T-1393618 bear the name of Carmeling P.
Crisologo, as the registered owner. Petitioners do not dispute the fact that she has a Torrens title
over the subject parcels of land.

The respondents Torrens certificates of title are immune from a collateral attack.

As a holder of a Torrens certificate of title, the law protects Crisologo from a collateral attack on the
same. Section 48 of P.D. No. 1529, otherwise known as the Property Registration Decree, provides
that a certificate of title cannot be the subject of a collateral attack. Thus:

SEC. 48. Certificate not subject to collateral attack. A certificate of title shall not be subject to
collateral attack. It cannot be altered, modified, or canceled except in a direct proceeding in
accordance with law.

This rule has been applied in innumerable cases, one of which was Francisco Madrid v. Spouses
Mapoy,19 where it was written:

Registration of land under the Torrens system, aside from perfecting the title and rendering it
indefeasible after the lapse of the period allowed by law, also renders the title immune from collateral
attack. A collateral attack transpires when, in another action to obtain a different relief and as an
incident of the present action, an attack is made against the judgment granting the title.

This manner of attack is to be distinguished from a direct attack against a judgment granting the title,
through an action whose main objective is to annul, set aside, or enjoin the enforcement of such
judgment if not yet implemented, or to seek recovery if the property titled under the judgment had
been disposed of. To permit a collateral attack on respondents-plaintiffs' title is to water down the
integrity and guaranteed legal indefeasibility of a Torrens title.

The petitioners-defendants' attack on the validity of respondents-plaintiffs' title, by claiming that fraud
attended its acquisition, is a collateral attack on the title. It is an attack incidental to their quest to
defend their possession of the properties in an "accion publiciana," not in a direct action whose main
objective is to impugn the validity of the judgment granting the title. This is the attack that possession
of a Torrens Title specifically guards against; hence, we cannot entertain, much less accord credit to,
the petitioners-defendants' claim of fraud to impugn the validity of the respondents-plaintiffs' title to
their property.

As the lawful possessor. the respondent has the right to eject the petitioners
 Page 28 of 68

The Court agrees with the CA that the only question that needs to be resolved in this suit to recover
possession is who between the parties is entitled to the physical or material possession of the
subject parcels of land. Therefore, the foremost relevant issue that needs to be determined here is
simply possession, not ownership.

The testimonial and documentary evidence on record prove that Crisologo has a preferred claim of
possession over that of petitioners. It cannot be denied that she bought the subject properties from
the previous owner in 1967, which was why the transfer certificates of title were subsequently issued
in her name. Records further show that she has been paying the realty taxes on the said properties
since 1969. She likewise appointed Isican as administrator of the disputed lands. More importantly,
there is no question that she offered to sell to petitioners the portions of the subject properties
occupied by them. Hence, she deserves to be respected and restored to her lawful possession as
provided in Article 539 of the New Civil Code.20

WHEREFORE, the petition is DENIED.

SO ORDERED.

JOSE CATRAL MENDOZA

Associate Justice

G.R. No. 198356 April 20, 2015

ESPERANZA SUP APO and the HEIRS OF ROMEO SUPAPO, namely: ESPERANZA, REX
EDWARD, RONALD TROY, ROMEO, JR., SHEILA LORENCE, all surnamed SUPAPO, and
SHERYL FORTUNE SUPAPO-SANDIGAN, Petitioners,
vs.
SPOUSES ROBERTO and SUSAN DE JESUS, MACARIO BERNARDO, and THOSE PERSONS
CLAIMING RIGHTS UNDER THEM, Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 filed by petitioners Esperanza Supapo and Romeo
Supapo2(Spouses Supapo) to assail the February 25, 2011 decision3 and August 25, 2011
resolution4 of the Court of Appeals (CA) in CA-G.R. SP No. 111674.

Factual Antecedents

The Spouses Supapo filed a complaint5 for accion publiciana against Roberto and Susan de Jesus
(Spouses de Jesus), Macario Bernardo (Macario), and persons claiming rights under them
(collectively, the respondents), with the Metropolitan Trial Court (MeTC) of Caloocan City. The
complaint sought to compel the respondents to vacate a piece of land located in Novaliches, Quezon
City, described as Lot 40, Block 5 (subject lot). The subject lot is covered by Transfer Certificate of
Title (TCT) No. C-284416 registered and titled under the Spouses Supapos names. The land has an
assessed value of thirty-nine thousand nine hundred eighty pesos (P39,980.00) as shown in the
Declaration of Real Property Value (tax declaration) issued by the Office of the City Assessor of
Caloocan.7
 Page 29 of 68

The Spouses Supapo did not reside on the subject lot. They also did not employ an overseer but
they made sure to visit at least twice a year.8 During one of their visits in 1992, they saw two (2)
houses built on the subject lot. The houses were built without their knowledge and permission. They
later learned that the Spouses de Jesus occupied one house while Macario occupied the other one.9

The Spouses Supapo demanded from the respondents the immediate surrender of the subject lot by
bringing the dispute before the appropriate Lupong Tagapamayapa. The Lupon issued a Katibayan
Upang Makadulog sa Hukuman (certificate to file action) for failure of the parties to settle amicably.10

The Spouses Supapo then filed a criminal case11 against the respondents for violation of Presidential
Decree No. 772 or the Anti-Squatting Law.12 The trial court convicted the respondents. The
dispositive portion of the decision reads:

WHEREFORE, in view of all the foregoing, this Court finds accused ROBERTO DE JESUS, SUSAN
DE JESUS and MACARIO BERNARDO, GUILTY beyond reasonable doubt for Violation of
Presidential Decree No. 772, and each accused is hereby ordered to pay a fine of ONE THOUSAND
PESOS (P1,000.00), and to vacate the subject premises.

SO ORDERED.13 (Emphasis supplied.)

The respondents appealed their conviction to the CA.14 While the appeal was pending, Congress
enacted Republic Act (RA) No. 8368, otherwise known as "An Act Repealing Presidential Decree
No. 772," which resulted to the dismissal of the criminal case.15

On April 30, 1999, the CAs dismissal of the criminal case became final.16

Notwithstanding the dismissal, the Spouses Supapo moved for the execution of the respondents
civil liability, praying that the latter vacate the subject lot. The Regional Trial Court (RTC) granted the
motion and issued the writ of execution. The respondents moved for the quashal of the writ but the
RTC denied the same. The RTC also denied the respondents motion for reconsideration.

The respondents thus filed with the CA a petition for certiorari to challenge the RTCs orders denying
the quashal of the writ and the respondents motion for reconsideration.17 The CA granted the petition
and held that with the repeal of the Anti-Squatting Law, the respondents criminal and civil liabilities
were extinguished.18 The dispositive portion of the decision reads: WHEREFORE, premises
considered, the petition for certiorari with prayer for injunction is GRANTED. The orders dated June
5, 2003 and July 24, 2003 of Branch 131 of the Regional Trial Court of Caloocan City in Criminal
Case No. C-45610 are REVERSED and SET ASIDE. Said court is hereby permanently ENJOINED
from further executing or implementing its decision dated March 18, 1996.

SO ORDERED.

The CA, however, underscored that the repeal of the Anti-Squatting Law does not mean that people
now have unbridled license to illegally occupy lands they do not own, and that it was not intended to
compromise the property rights of legitimate landowners.19 In cases of violation of their property
rights, the CA noted that recourse may be had in court by filing the proper action for recovery of
possession.

The Spouses Supapo thus filed the complaint for accion publiciana.20
 Page 30 of 68

After filing their Answer,21 the respondents moved to set their affirmative defenses for preliminary
hearing22 and argued that: (1) there is another action pending between the same parties; (2) the
complaint for accion publiciana is barred by statute of limitations; and (3) the Spouses Supapos
cause of action is barred by prior judgment.

The MeTC Ruling23

The MeTC denied the motion to set the affirmative defenses for preliminary hearing. It ruled that the
arguments advanced by the respondents are evidentiary in nature, which at best can be utilized in
the course of the trial. The MeTC likewise denied the respondents motion for reconsideration.

From the MeTCs ruling, the respondents filed a petition for certiorari with the RTC.24

The RTC Ruling25

The RTC granted the petition for certiorari on two grounds, viz.: (i) the action has prescribed; and (ii)
accion publiciana falls within the exclusive jurisdiction of the RTC.

It held that in cases where the only issue involved is possession, the MeTC has jurisdiction if the
action for forcible entry or unlawful detainer is filed within one (1) year from the time to demand to
vacate was made. Otherwise, the complaint for recovery of possession should be filed before the
RTC.

The dispositive portion of the RTC decision reads:

WHEREFORE, premises considered, the instant petition is hereby GRANTED.

The Orders dated October 24, 2008 and February 23, 2009 are hereby declared NULL and VOID.

The Public Respondent is hereby directed to DISMISS Civil Case No. 08-29245 for lack of
jurisdiction.

SO ORDERED.26

In their motion for reconsideration,27 the Spouses Supapo emphasized that the courts jurisdiction
over an action involving title to or possession of land is determined by its assessed value; that the
RTC does not have an exclusive jurisdiction on all complaints for accion publiciana; and that the
assessed value of the subject lot falls within MeTCs jurisdiction.

The RTC denied the petitioners motion for reconsideration.

It held that although the MeTC had jurisdiction based on the assessed value of the subject lot, the
Spouses Supapos cause of action had already prescribed, the action having been filed beyond the
ten (10)-year prescriptive period under Article 555 of the Civil Code.28 As it was not proven when the
actual demand to vacate was made, the RTC ruled that the reckoning period by which the ejectment
suit should have been filed is counted from the time the certificate to file action was issued. The
certificate to file action was issued on November 25, 1992,while the complaint for accion publiciana
was filed only on March 7, 2008, or more than ten (10) years thereafter.

Dissatisfied with the RTC ruling, the Spouses Supapo appealed to the CA.29
 Page 31 of 68

The CA Ruling30

The CA dismissed the appeal and held that the complaint for accion publiciana should have been
lodged before the RTC and that the period to file the action had prescribed.

The dispositive portion of the CA decision reads:

WHEREFORE, the appeal is DENIED. The Decision dated June 30, 2009 and Order dated October
19, 2009 are AFFIRMED.

SO ORDERED.

The Spouses Supapo moved31 but failed32 to secure a reconsideration of the CA decision; hence,
they came to us through the present petition.

The Petition

In seeking reversal of the CAs ruling, the Spouses Supapo essentially argue that:

(1) the MeTC exercises exclusive original jurisdiction over accion publiciana where the
assessed value of the property does not exceed P20,000.00, or P50,000.00 if the property is
located in Metro Manila; and that

(2) prescription had not yet set in because their cause of action is imprescriptible under the
Torrens system.

The Respondents Case33

The respondents argue that the complaint for accion publiciana was (1) filed in the wrong court; (2)
barred by prescription; and (3) barred by res judicata.

Issues

The issues for resolution are:

I. Whether the MeTC properly acquired jurisdiction;

II. Whether the cause of action has prescribed; and

III. Whether the complaint for accion publiciana is barred by res judicata.

Our Ruling

The petition is meritorious.

We hold that: (1) the MeTC properly acquired jurisdiction; (2) the cause of action has not prescribed;
and (3) the complaint is not barred by res judicata.

Accion Publiciana and the Jurisdiction of the MeTC

 Page 32 of 68

Accion publiciana is an ordinary civil proceeding to determine the better right of possession of realty
independent of title. It refers to an ejectment suit filed after the expiration of one year from the
accrual of the cause of action or from the unlawful withholding of possession of the realty.34

In the present case, the Spouses Supapo filed an action for the recovery of possession of the
subject lot but they based their better right of possession on a claim of ownership.

This Court has held that the objective of the plaintiffs in accion publiciana is to recover possession
only, not ownership. However, where the parties raise the issue of ownership, the courts may pass
upon the issue to determine who between the parties has the right to possess the property.35

This adjudication is not a final determination of the issue of ownership; it is only for the purpose of
resolving the issue of possession, where the issue of ownership is inseparably linked to the issue of
possession. The adjudication of the issue of ownership, being provisional, is not a bar to an action
between the same parties involving title to the property. The adjudication, in short, is not conclusive
on the issue of ownership.36

Thus, while we will dissect the Spouses Supapos claim of ownership over the subject property, we
will only do so to determine if they or the respondents should have the right of possession. Having
thus determined that the dispute involves possession over a real property, we now resolve which
court has the jurisdiction to hear the case.

Under Batas Pambansa Bilang 129,37 the jurisdiction of the RTC over actions involving title to or
possession of real property is plenary.38

RA No. 7691,39 however, divested the RTC of a portion of its jurisdiction and granted the Metropolitan
Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts the exclusive and original
jurisdiction to hear actions where the assessed value of the property does not exceed Twenty
Thousand Pesos (P20,000.00), or Fifty Thousand Pesos (P50,000.00), if the property is located in
Metro Manila.

Section 1 of RA No. 7691 states:

Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary
Reorganization Act of 1980," is hereby amended to read as follows:

Section. 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive original
jurisdiction:

(2) In all civil actions which involve the title to, or possession of, real property, or any interest therein,
where the assessed value of the property involved exceeds Twenty thousand pesos (P20,000.00)
or, for civil actions in Metro Manila, where such value exceeds Fifty thousand pesos (P50,000.00) x
x x. (Emphasis supplied.)

Section 3 of the same law provides:

Section. 3. Section 33 of the same law is hereby amended to read as follows:

Section. 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit
Trial Courts in Civil Cases. - Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
Trial Courts shall exercise:
 Page 33 of 68

xxxx

(3) Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real
property, or any interest therein where the assessed value of the property or interest therein does
not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila, where such
assessed value does not exceed Fifty thousand pesos (P50,000.00)exclusive of interest, damages
of whatever kind, attorney's fees, litigation expenses and costs x x x. (Emphasis supplied.)

In view of these amendments, jurisdiction over actions involving title to or possession of real property
is now determined by its assessed value.40 The assessed value of real property is its fair market
value multiplied by the assessment level. It is synonymous to taxable value.41

In Quinagoran v. Court of Appeals,42 we explained:

[D]oes the RTC have jurisdiction over all cases of recovery of possession regardless of the value of
the property involved?

The answer is no. The doctrine on which the RTC anchored its denial of petitioner's Motion to
Dismiss, as affirmed by the CA -- that all cases of recovery of possession or accion publiciana lies
with the regional trial courts regardless of the value of the property -- no longer holds true. As things
now stand, a distinction must be made between those properties the assessed value of which is
below P20,000.00, if outside Metro Manila; and P50,000.00, if within.43(Emphasis supplied.)

In this regard, the complaint must allege the assessed value of the real property subject of the
complaint or the interest thereon to determine which court has jurisdiction over the action. This is
required because the nature of the action and the court with original and exclusive jurisdiction over
the same is determined by the material allegations of the complaint, the type of relief prayed for by
the plaintiff, and the law in effect when the action is filed, irrespective of whether the plaintiffs are
entitled to some or all of the claims asserted therein.44

In the present case, the Spouses Supapo alleged that the assessed value of the subject lot, located
in Metro Manila, is P39,980.00. This is proven by the tax declaration45 issued by the Office of the City
Assessor of Caloocan. The respondents do not deny the genuineness and authenticity of this tax
declaration.

Given that the Spouses Supapo duly complied with the jurisdictional requirements, we hold that the
MeTC of Caloocan properly acquired jurisdiction over the complaint for accion publiciana. The cause
of action has not prescribed

The respondents argue that the complaint for accion publiciana is dismissible for being filed out of
time.

They invoke Article 555 of the Civil Code, which states:

Art. 555. A possessor may lose his possession:

xxxx

(4) By the possession of another, subject to the provisions of Article 537, if the new possession has
lasted longer than one year. But the real right of possession is not lost till after the lapse of ten years.
(Emphasis supplied.)
 Page 34 of 68

The respondents point out that the Spouses Supapo filed the complaint for accion publiciana on
March 7, 2008 or more than ten (10) years after the certificate to file action was issued on November
25, 1992. The respondents contend that the Spouses Supapo may no longer recover possession of
the subject property, the complaint having been filed beyond the period provided by law.

Further, while the respondents concede that the Spouses Supapo hold a TCT over the subject
property, and assuming a Torrens title is imprescriptible and indefeasible, they posit that the latter
have lost their right to recover possession because of laches.

On their part, the Spouses Supapo admit that they filed the complaint for accion publiciana more
than ten (10) years after the certificate to file action was issued. Nonetheless, they argue that their
cause of action is imprescriptible since the subject property is registered and titled under the Torrens
system.

We rule that the Spouses Supapos position is legally correct.

At the core of this controversy is a parcel of land registered under the Torrens system. The Spouses
Supapo acquired the TCT on the subject lot in 1979.46 Interestingly, the respondents do not
challenge the existence, authenticity and genuineness of the Supapos TCT.47

In defense, the respondents rest their entire case on the fact that they have allegedly been in actual,
public, peaceful and uninterrupted possession of the subject property in the concept of an owner
since 1992. The respondents contend that they built their houses on the subject lot in good faith.
Having possessed the subject lot for more than ten (10) years, they claim that they can no longer be
disturbed in their possession.48

Under the undisputed facts of this case, we find that the respondents contentions have no legal
basis.

In a long line of cases, we have consistently ruled that lands covered by a title cannot be acquired by
prescription or adverse possession. We have also held that a claim of acquisitive prescription is
baseless when the land involved is a registered land because of Article 112649 of the Civil Code in
relation to Act 496 [now, Section 47 of Presidential Decree (PD) No. 152950 ].51

The Spouses Supapo (as holders of the TCT) enjoy a panoply of benefits under the Torrens system.
The most essential insofar as the present case is concerned is Section 47 of PD No. 1529 which
states:

Section 47. Registered land not subject to prescriptions. No title to registered land in derogation of
the title of the registered owner shall be acquired by prescription or adverse possession.

In addition to the imprescriptibility, the person who holds a Torrens Title over a land is also entitled to
the possession thereof.52 The right to possess and occupy the land is an attribute and a logical
consequence of ownership.53Corollary to this rule is the right of the holder of the Torrens Title to eject
any person illegally occupying their property. Again, this right is imprescriptible.54

In Bishop v. CA,55 we held that even if it be supposed that the holders of the Torrens Title were
aware of the of other persons occupation of the property, regardless of the length of that
possession, the lawful owners have a right to demand the return of their property at any time as long
as the possession was unauthorized or merely tolerated, if at all.56
 Page 35 of 68

Even if the defendant attacks the Torrens Title because of a purported sale or transfer of the
property, we still rule in favor of the holder of the Torrens Title if the defendant cannot adduce, in
addition to the deed of sale, a duly-registered certificate of title proving the alleged transfer or sale.

A case in point is Umpoc v. Mercado57 in which we gave greater probative weight to the plaintiffs
TCT vis--vis the contested unregistered deed of sale of the defendants. Unlike the defendants in
Umpoc, however, the respondents did not adduce a single evidence to refute the Spouses Supapos
TCT. With more reason therefore that we uphold the indefeasibility and imprescriptibility of the
Spouses Supapos title.

By respecting the imprescriptibility and indefeasibility of the Spouses Supapos TCT, this Court
merely recognizes the value of the Torrens System in ensuring the stability of real estate
transactions and integrity of land registration.

We reiterate for the record the policy behind the Torrens System, viz.:

The Government has adopted the Torrens system due to its being the most effective measure to
guarantee the integrity of land titles and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on the assurance that the seller's
title thereto is valid, he should not run the risk of being told later that his acquisition was ineffectual
after all, which will not only be unfair to him as the purchaser, but will also erode public confidence in
the system and will force land transactions to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence will be that land conflicts
can be even more abrasive, if not even violent.58

With respect to the respondents defense59 of laches, suffice it to say that the same is evidentiary in
nature and cannot be established by mere allegations in the pleadings.60 In other words, the party
alleging laches must adduce in court evidence proving such allegation. This Court not being a trier of
facts cannot rule on this issue; especially so since the lower courts did not pass upon the same.

Thus, without solid evidentiary basis, laches cannot be a valid ground to deny the Spouses Supapo's
petition.61 On the contrary, the facts as culled from the records show the clear intentof the Spouses
Supapo to exercise their right over and recover possession of the subject lot, viz.: (1) they brought
the dispute to the appropriate Lupon; (2) they initiated the criminal complaint for squatting; and (3)
finally, they filed the accion publiciana. To our mind, these acts negate the allegation of laches.

With these as premises, we cannot but rule that the Spouses Supapos right to recover possession
of the subject lot is not barred by prescription.

The action is not barred by prior judgment

As a last-ditch effort to save their case, the respondents invoke res judicata. They contend that the
decision of the CA in CA-G.R. SP No. 78649 barred the filing of the accion publiciana.

To recall, CA-G.R. SP No. 78649 is the petition for certiorari filed by the respondents to challenge
the RTCs issuance of the writ enforcing their civil liability (i.e., to vacate the subject property) arising
from their conviction under the Anti-Squatting Law. The CA granted the petition and permanently
enjoined the execution of the respondents conviction because their criminal liability had been
extinguished by the repeal of the law under which they were tried and convicted. It follows that their
civil liability arising from the crime had also been erased.
 Page 36 of 68

The respondents reliance on the principle of res judicatais misplaced.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section
47(b) of the Rules of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).62

"Bar by prior judgment" means that when a right or fact had already been judicially tried on the
merits and determined by a court of competent jurisdiction, the final judgment or order shall be
conclusive upon the parties and those in privity with them and constitutes an absolute bar to
subsequent actions involving the same claim, demand or cause of action.63

The requisites64 for res judicata under the concept of bar by prior judgment are:

(1) The former judgment or order must be final;

(2) It must be a judgment on the merits;

(3) It must have been rendered by a court having jurisdiction over the subject matter and the
parties; and

(4) There must be between the first and second actions, identity of parties, subject matter,
and cause of action.

Res judicata is not present in this case.

While requisites one to three may be present, it is obvious that the there is no identity of subject
matter, parties and causes of action between the criminal case prosecuted under the Anti-Squatting
Law and the civil action for the recovery of the subject property.

First, there is no identity of parties. The criminal complaint, although initiated by the Spouses
Supapo, was prosecuted in the name of the people of the Philippines. The accion publiciana, on the
other hand, was filed by and in the name of the Spouses Supapo.

Second, there is no identity of subject matter. The criminal case involves the prosecution of a crime
under the Anti-Squatting Law while the accion publiciana is an action to recover possession of the
subject property.

And third, there is no identity of causes of action. The people of the Philippines filed the criminal
case to protect and preserve governmental interests by prosecuting persons who violated the
statute. The Spouses Supapo filed the accion publiciana to protect their proprietary interests over
the subject property and recover its possession.

Even casting aside the requirement of identity of causes of action, the defense of res judicata has
still no basis.

The concept of "conclusiveness of judgment" does not require that there is identity of causes of
action provided that there is identity of issue and identity of parties.65

Under this particular concept of res judicata, any right, fact, or matter in issue directly adjudicated or
necessarily involved in the determination of an action before a competent court in which judgment is
rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated
 Page 37 of 68

between the parties and their privies, whether or not the claim, demand, purpose, or subject matter
of the two actions is the same.66

As already explained, there is no identity of parties between the criminal complaint under the Anti-
Squatting law and the civil action for accion publiciana. For this reason alone, "conclusiveness of
judgment" does not apply.

Even if we assume, for the sake of argument, that there is identity of parties, "conclusiveness of
judgment" still does not apply because there is no identity of issues. The issue in the criminal case is
whether the respondents (accused therein) committed the crime alleged in the information, while the
only issue in accion publiciana is whether the Spouses Supapo have a better right than the
respondents to possess and occupy the subject property. 1w phi 1

For all these reasons, the defense of res judicata is baseless.

Final Note

As a final note, we stress that our ruling in this case is limited only to the issue of determining who
between the parties has a better right to possession. This adjudication is not a final and binding
determination of the issue of ownership. As such, this is not a bar for the parties or even third
persons to file an action for the determination of the issue of ownership.

WHEREFORE, premises considered, we GRANT the petition, and consequently REVERSE and
SET ASIDE the February 25, 2011 decision and August 25, 2011 resolution of the Court of Appeals
in CA-G.R. SP No. 111674.

SO ORDERED.

ARTURO D. BRION
Associate Justice

G.R. No. 170677 October 24, 2012

VSD REALTY & DEVELOPMENT CORPORATION, Petitioner,

vs.
UNIWIDE SALES, INC. and DOLORES BAELLO TEJADA, Respondents.

DECISION

PERALTA, J.:

This is a petition for review on certiorari1 of the Decision of the Court of Appeals dated May 30, 2005
in CA-G.R. CV No. 69824 and its Resolution dated December 6, 2005, denying petitioners motion
for reconsideration.

The Decision of the Court of Appeals reversed and set aside the Decision of the Regional Trial Court
(RTC) of Caloocan City Branch 126 annulment of title and recovery of possession of property.

The facts are as follows:

 Page 38 of 68

On June 8, 1995, petitioner VSD Realty and Development Corporation (VSD) filed a Complaint2 for
annulment of title and recovery of possession of property against respondents Uniwide Sales, Inc.
(Uniwide) and Dolores Baello3with the RTC of Caloocan City, Branch 126 (trial court).4 Petitioner
sought the nullification of Transfer Certificate of Title (TCT) No. (35788) 12754 in the name of
Dolores Baello and the recovery of possession of property that is being occupied by Uniwide by
virtue of a contract of lease with Dolores Baello.

Petitioner alleged that it is the registered owner of a parcel of land in Caloocan City, with an area of
2,835.30 square meters, more or less, and covered by TCT No. T-2853125 of the Register of Deeds
of Caloocan City. Petitioner purchased the said property from Felisa D. Bonifacio, whose title
thereto, TCT No. 265777, was registered by virtue of an Order6 dated October 8, 1992 authorizing
the segregation of the same in Land Registration Commission (LRC) Case No. C-3288. Petitioner
also alleged that its right to the subject property and the validity and correctness of the technical
description and location of the property are duly established in LRC Case No. C-3288.7

Petitioner alleged that respondent Baello is the holder and registered owner of a parcel of land
covered by TCT No. (35788) 12754 in the Register of Deeds for the Province of Rizal. By virtue of
the said title, Baello claims ownership and has possession of the property covered by petitioners
title, and she entered into a contract of lease with respondent Uniwide.

Petitioner alleged that its title, TCT No. 285312, is the correct, valid and legal document that covers
the subject property, since it is the result of land registration proceedings in accordance with law.

Petitioner alleged that Baellos title, TCT No. 35788, is spurious and can only be the result of
falsification and illegal machinations, and has no legal basis to establish any right over the subject
property. Moreover, the technical description of Baellos title is so general that it is impossible to
determine with certainty the exact location of the property covered by it. Petitioner further alleged
that the technical description has no legal basis per the records of the Lands Management Bureau
and the Bureau of Lands. It added that Baellos title described the property to be Lot 3-A of
subdivision plan Psd 706, but an examination of Psd 706 shows that there is no Lot 3-A in plan Psd
706.8Petitioner contends that in view of the foregoing reasons, Baello has no legal basis to claim the
subject property, and Baellos title, TCT No. 35788, is spurious and illegal and should be annulled.
Thus, petitioner sought recovery of possession of the subject property.

Petitioner prayed that judgment be rendered:

1) declaring TCT No. 35788 (12754) to be null and void;

2) ordering respondent Baello and all persons/entity claiming title under her, including
Uniwide, to convey and to return the property to petitioner;

3) ordering respondents Baello and Uniwide, jointly and severally, to pay just and reasonable
compensation per month in the amount of P1.5 million for the occupancy and use of
petitioners land from the time it acquired ownership of the land on September 12, 1994 until
actual vacation by respondents; and

4) ordering respondents, jointly and severally, to pay attorneys fees of P250,000.00 plus 20
percent of amounts or value actually recovered.

In its Answer,9 respondent Uniwide alleged that on July 15, 1988, it entered into a Contract of
Lease10 with respondent Baello involving a parcel of land with an area of about 2,834 square meters,
located in Caloocan City, which property is covered by TCT No. 35788 in the name of Baello. As a
 Page 39 of 68

consequence of the lease agreement, it constructed a building worth at least P200,000,000.00 on

the said property. It prayed that judgment be rendered dismissing the complaint for lack of cause of
action against Uniwide; declaring the contract of lease as valid and enforceable; and ordering
petitioner to pay Uniwide moral and exemplary damages, among others.

On the other hand, respondent Baello filed a Motion to Dismiss9 on the grounds that the complaint
stated no cause of action, and that the demand for annulment of title and/or conveyance, whether
grounded upon the commission of fraud or upon a constructive trust, has prescribed, and is barred
by laches.

In an Order11 dated December 5, 1995, the trial court denied Baellos motion to dismiss for lack of
merit. Baellos motion for reconsideration was likewise denied for lack of merit in an Order12 dated
February 27, 1996.

Subsequently, respondent Baello filed an Answer,13 alleging that the subject property was
bequeathed to her through a will by her adoptive mother, Jacoba Galauran. She alleged that during
the lifetime of Jacoba Galauran, the subject property was originally surveyed on January 24-26,
192314 and, thereafter, on December 29, 1924.15 Baello alleged that after

Jacoba Galauran died in 1952, her will was duly approved by the probate court, the Court of First
Instance, Pasig, Rizal. Baello stated that she registered the subject property in her name, and TCT
No. (35788) 12754 was issued in her favor on September 6, 1954. In 1959, she had the subject
property surveyed.16 On July 15, 1988, she entered into a Contract of Lease17 with respondent
Uniwide, which erected in full public view the building it presently occupies. Baello stated that she
has been religiously paying realty taxes for the subject property.18

Baello alleged that during her open and public possession of the subject property spanning over 40
years, nobody came forward to contest her title thereto. It was only in September 1994, when Baello
was absent from the Philippines that petitioner demanded rentals from Uniwide, asserting ownership
over the land.

As an affirmative defense, respondent Baello contended that the Complaint should be dismissed as
she enjoys a superior right over the subject property because the registration of her title predates the
registration of petitioners title by at least 40 years.

The deposition of respondent Baello, which was taken on October 1, 1998 at the Philippine Consular
Office in San Francisco, California, United States of America, affirmed the same facts stated in her
Answer.

On October 2, 2000, the trial court rendered a Decision19 in favor of petitioner. The trial court stated
that the evidence for petitioner showed that it is the rightful owner of the subject lot covered by TCT
No. 285312 of the Register of Deeds of Caloocan City. The lot was purchased by petitioner from
Felisa D. Bonifacio, who became the owner thereof by virtue of her petition for segregation of the
subject property from Original Certificate of Title (OCT) No. 994 of the Register of Deeds of Rizal in
LRC Case No. C-3288.20 The trial court found no reason to deviate from the ruling of Judge
Geronimo Mangay in LRC Case No. C-3288, which was rendered after receiving all the evidence,
including that of Engineer Elpidio de Lara, who testified under oath that his office, the Technical
Services of the Department of Environment and Natural Resources (DENR), had not previously
issued the technical description appearing on TCT No. 265777 (Felisa Bonifacios title), and he also
certified to the records of the technical description of Lot 23-A-4-B-2-A-3-A of subdivision plan Psd
706 on July 9, 1990, which refers to the same technical description appearing on Felisa D.
Bonifacios title. The trial court stated that it cannot question the Order in LRC Case No. C-3288
 Page 40 of 68

issued by a co-equal court in this respect, considering that Regional Trial Courts now have the
authority to act not only on applications for original registration, but also over all petitions filed after
original registration of title, with power to hear and determine all questions arising from such
applications or petitions.

Moreover, the trial court stated that aside from the complete records of the land registration
proceedings (LRC Case No. C-3288), petitioner presented witnesses to support its causes of action,
thus:

Norberto Vasquez, Deputy Register of Deeds of Caloocan City, testified that TCT No. 285312 (Exh.
"A") in the name of the plaintiff VSD Realty and Development Corporation originated from TCT No.
265777 (Exh. "B") in the name of Felisa D. Bonifacio; that Felisa Bonifacio sold the property to VSD
Realty and Development Corporation, and the same was registered under the name of the plaintiff;
that Felisa Bonifacio came in possession of TCT No. 265777 by virtue of an Order (Exh. "C") issued
by the Regional Trial Court, Branch 125, Kalookan City, dated May 31, 1993; that the Registry of
Deeds received the Order of the RTC Branch 125 and by virtue of said Order with finality, their office
issued TCT No. 265777 in the name of Felisa D. Bonifacio; that their office only issues titles if there
is a court Order. He related the derivative documents that were filed before their office such as the
Court Order dated October 8, 1992, in L.R.C. Case No. 3288; the Certificate of finality to said Order
dated April 6, 1999 and the subdivision plan to Lot No. 23-A-4-B-2-A-3-A.

Evelyn Celzo, a Geodetic Engineer, DENR, NCR, testified that she was the one who conducted the
survey of the property of Felisa D. Bonifacio covered by TCT No. 265777; that she prepared a
Verification Plan (Exh. "D") duly approved by the DENR, NCR, Director; that before the survey was
conducted, she notified the adjoining owners that a survey will be conducted on the property of
Felisa Bonifacio; that she was a witness in that case filed by Felisa Bonifacio vs. Syjuco before RTC
Br. 125, Kalookan City. She attested to the verification survey she conducted of the subject lot as
directed by her office. She confirmed that the technical description approved and recorded in their
office is Lot 23-A-4-B-2-A-3-A of Psd 706. The DENR, NCR keeps a record of all technical
descriptions approved and authorized by it under the Torrens system. She pointed out that only one
(1) technical description is allowed for one particular lot. The subject technical description was
submitted as Exhibit "F" for the plaintiff.

On January 27, 1997, witness Evelyn Celzo was subjected for cross-examination.

Witness testified that a request for verification survey was made by Felisa D. Bonifacio addressed to
the Chief, Survey Division of the DENR, NCR; that a survey order was given to their office by the
Regional Technical Director, Lands Management Service on August 22, 1994; that they conducted
the verification survey at the actual site of the property of Felisa D. Bonifacio; that they checked all
the boundaries of the property where they conducted the verification survey; that they likewise
conducted actual visual inspection on the monuments; that the whole area covered by TCT No.
265777 is occupied by Uniwide Sales, Inc.; that she went to the office of the Registry of Deeds and
inquired as to the address of the owner of Uniwide Sales, Inc., but she was told by the people there
that they do not know; that when she conducted the survey, she tried to inform the owner of the
adjoining buildings, but nobody answered; that only one became the subject of the verification
survey and this is the lot covered by TCT No. 265777 in the name of Felisa Bonifacio.

Soccoro Andrade, in-charge of the records of Civil/LRC cases in Branch 125 of the Regional Trial
Court, Caloocan City, appeared bringing with her the records. She identified the pages of L.R.C.
Case No. 3288, submitted as Exhibit "G" in this case.
 Page 41 of 68

Atty. Kaulayao V. Faylona, Director and Corporate Secretary of VSD Realty and Development
Corporation testified on the details that led to the purchase of subject property. He verified the
records of L.R.C. Case

No. C-3288, as well as the transcripts and exhibits submitted in the case. He checked with the
Registry of Deeds and was satisfied that the title was clean. Uniwide Sales, Inc., through its counsel
Fortun and Narvasa, stated that it was not the owner of the subject property. It was a mere lessee,
but during their talks on possible amicable settlement, Uniwide had to reveal the identity and
address of the owner. This matter was clearly stated in the letter of Fortun and Narvasa dated May
18, 1995. As suggested by defendant Uniwide, the instant case was filed on June 8, 1995, to include
the alleged lessor of the land, Dolores Baello, care of ACCRA Law Office. He likewise testified on
the damages suffered by VSD. Witness testified that plaintiff VSD Realty and Development
Corporation filed the instant case against the defendants because plaintiff is the owner of the lot
wherein Uniwide Sales is located x x x.21

Further, the trial court found that the technical description in respondent Baellos title is not the same
as the technical description in petitioners title. A mere reading of the technical description in
petitioners title and that in Baellos title would show that they are not one and the same. The trial
court averred that the technical description of the subject lot in petitioners title is recorded with the
Register of Deeds of Caloocan City.22 It stated that Baellos claim to the same technical description
cannot by itself alone be given weight, and the evidence offered by Baello is not enough.

The trial court held that from the evidence adduced, petitioner is the registered owner of TCT No.
275312, formerly TCT No. 265777 when Felisa D. Bonifacio was the registered owner, while
respondent Baello is the registered owner of a parcel of land covered by TCT No. (35788) 12754
and respondent Uniwide is a mere lessee of the land. Baello is the holder of a title over a lot entirely
different and not in anyway related to petitioners title and its technical description. Petitioner proved
its ownership and the identity of the subject property.

The dispositive portion of the trial courts decision reads:

WHEREFORE, in the light of the foregoing consideration, judgment is hereby rendered ordering the
following:

1. Declaring TCT No. 35788 (12754) to be null and void;

2. Defendant Baello and all persons/entity claiming title under her, including UNIWIDE, to
convey and to return the property to plaintiff VSD on the basis of the latter's full, complete,
valid and legal ownership;

3. Defendant Baello and UNIWIDE, jointly and severally, to pay a just and reasonable
compensation per month of P1,200,000.00 with legal interest for the occupancy and use of
plaintiff's land from September 12, 1994, until actually vacated by them;

4. Defendants, jointly and severally, to pay attorney's fees of P200,000.00.

SO ORDERED.23

Respondents filed their respective motion for reconsideration. In its Order24 dated January 12, 2001,
the trial court denied respondents motions for reconsideration for lack of merit, and it also denied
petitioners motion for immediate execution.
 Page 42 of 68

Respondents appealed the trial courts decision to the Court of Appeals.

On May 30, 2005, the Court of Appeals rendered a Decision25 in favor of respondents and dismissed
petitioners complaint.

The Court of Appeals stated that the main issue to be resolved was whether or not there is a valid
ground to annul respondent Baello's TCT No. 35788 to warrant the reconveyance of the subject
property to petitioner.

The Court of Appeals held that the trial court erred in declaring respondent Baello's TCT No. 35788
as null and void. It stated that well settled is the rule that a Torrens title is generally a conclusive
evidence of ownership of the land referred to therein, and a strong presumption exists that it was
regularly issued and valid.26 Hence, respondent Baello's TCT No. 35788 enjoys the presumption of
validity.

The Court of Appeals stated that based on existing jurisprudence, a certificate of title may be
annulled or cancelled by the court under the following grounds: (1) when the title is void because (a)
it was procured through fraud, (b) it was issued for a land already covered by a prior Torrens title, (c)
it covers land reserved for military, naval or civil public purposes, and (d) it covers a land which has
not been brought under the registration proceeding; (2) when the title is replaced by one issued
under a cadastral proceeding; and (3) when the condition for its issuance has been violated by the
registered owner.27

The Court of Appeals averred that while petitioner sought to annul respondent Baello's TCT No.
35788 on the ground that the same was spurious, it failed to prove that Baellos title was indeed
spurious. The appellate court also noted that the trial courts decision never mentioned that Baello's
title was spurious. It further stated that any doubt or uncertainty as to the technical description
contained in a certificate of title is not a ground for annulment of title. It held that since there was no
legal basis for the annulment of Baello's TCT No. 35788, the trial court erred in declaring the said
title null and void.

The Court of Appeals denied the cross-claim for moral damages filed by respondent Uniwide against
respondent Baello, since Uniwide failed to establish its claim of besmirched reputation so as to be
entitled to moral damages; hence, there was no basis to award the same. The other claims were
likewise denied for lack of merit.

The dispositive portion of the Decision of the Court of Appeals reads:

WHEREFORE, the assailed Decision of the Regional Trial Court of Caloocan City, Branch 126, in
Civil Case No. C-16933 is REVERSED and SET ASIDE and a new one entered DISMISSING the
instant complaint.28

Petitioners motion for reconsideration was denied by the Court of Appeals for lack of merit in the
Resolution29dated December 6, 2005.

Hence, petitioner filed this petition raising the following issues:

I
 Page 43 of 68

THE COURT OF APPEALS ERRED IN RULING THAT THE BURDEN OF PROOF DID NOT
SHIFT TO RESPONDENTS, NOTWITHSTANDING THE OVERWHELMING EVIDENCE
PRESENTED BY PETITIONER.

II

THE COURT OF APPEALS MISCONSTRUED PETITIONERS ALLEGATION THAT THE

"ISSUANCE OF TWO TITLES OVER THE SAME PIECE OF LAND HAS NOT BEEN
PROVED."

III

THE COURT OF APPEALS ERRED IN TREATING PETITIONERS COMPLAINT AS ONE

ONLY FOR ANNULMENT OF TITLE WHEN PETITIONER ALSO SOUGHT
RECONVEYANCE OF THE LOT IN QUESTION.

IV

THE COURT OF APPEALS ERRED IN RULING THAT RESPONDENT BAELLOS TITLE IS

NOT SPURIOUS.

RESPONDENT UNIWIDE IS NOT A LESSOR IN GOOD FAITH.30

The pertinent issues raised by petitioner shall be discussed together with the main issues which are:
(1) whether or not petitioner is entitled to recovery of possession of the subject property; and (2)
whether or not the title of respondent Baello may be annulled.

Petitioner contends that the Court of Appeals erred in ruling that the burden of proof did not shift to
respondents Baello and Uniwide, as it more than adequately proved its title to the lot in question by
testimonial and documentary evidence.

In civil cases, the specific rule as to the burden of proof is that the plaintiff has the burden of proving
the material allegations of the complaint which are denied by the answer; and the defendant has the
burden of proving the material allegations in his answer, which sets up new matter as a
defense.31 This rule does not involve a shifting of the burden of proof, but merely means that each
party must establish his own case.32

In this case, petitioner seeks the annulment of respondent Baellos title and the recovery of
possession of property being occupied by Uniwide on the ground that it has the correct title to the
subject property, with the proper technical description, while respondent Baellos title is spurious and
the technical description in her title is in general terms and does not identify her land with certainty.

The Court holds that petitioner was able to establish through documentary and testimonial evidence
that the technical description of its Torrens title covers the property that is being occupied by
respondent Uniwide by virtue of a lease contract with respondent Baello. A comparison of the
technical description of the land covered by the title of petitioner and the technical description of the
land covered by the title of Baello shows that they are not the same.

TCT No. 285312 registered in the name of petitioner reads:

 Page 44 of 68

IT IS HEREBY CERTIFIED that certain land situated in Caloocan City, Philippines, bounded and
described as follows:

A parcel of land (Lot 23-A-4-B-2-A-3-A of the subd. plan Psd-706, LRC x x x situated in Balintawak,
Caloocan, Rizal. Bounded on the E., along line 1-2, by Lot 23-A-4-B-2-A-3-D, on the SE., along line
2-3 by Lot 23-A-4-B-2-A-3-B, both of the subd. plan and on the SW., NW., along line 3-4-1 by Lot 23-
A-4-B-2-A-6, Beginning at a point marked "1" on plan being N. 69 deg. 07E.,

1,306.21m. from BLLM No. 1, Caloocan thence; S. 01 deg. 46W., 25.16 m. to point 2; S 65 deg.
116.78 m. to point 3; N. 23 deg. 12W., 23.85 m. to point 4; N. 65 deg. 57E. 127.39 m. to the point of
beginning; containing an area of TWO THOUSAND EIGHT HUNDRED THIRTY-FOUR

SQUARE METERS AND EIGHTY SQ. DECIMETERS (2,834.80) more or less. All pts. referred to
are indicated on plan and are marked on the ground by P.S. old points bearings true; date of original
survey, Date of subd. survey, Dec. 29, 1922.33

On the other hand, TCT No. (35788) 12754, registered in the name of respondent Dolores Baello,
states:

IT IS HEREBY CERTIFIED that certain land situated in the Municipality of Caloocan, Province of
Rizal, Philippines, bounded and described as follows:

Un terreno (Lote No. 3-A del plano de subdivision Psd-706, parte del Lote No. 23-A, plano original
Psu-2345 de la Hacienda de Maysilo), situado en el Barrio de Balintawak, Municipio de Caloocan,
Provincia de Rizal. Linda por el NE, con el Lote No. 3-D del plano de subdivision; por el SE, con el
lote No. 3-B del plano de subdivision; por el SO, con el Lote No. 7; y por el NO, con propiedad de
Ramos Dane (Lote No. 1). x x x midiendo una extension superficial de DOS MIL OCHOCIENTOS
TREINTA Y CUATRO METROS CUADRADOS CON OCHENTA DECIMETROS (2,834.80) mas o
menos. x x x la fecha de la medicion original, 8 al 27 de Septiembre, 4 al 21 de Octubre y 17-18 de
Noviembre de 1911, y de la subdivision 29 de Diciembre de 1924. (Full technical description
appears on Transfer Certificate of Title No. 10300/T-42).34

From the foregoing, the title of petitioner covers a parcel of land referred to as Lot 23-A-4-B-2-A-3-A
of the subdivision plan Psd-706, while the title of respondent Baello covers a parcel of land referred
to as Lot No. 3-A of the subdivision plan Psd-706. It should be pointed out that the verification survey
of Lot 23-A-4-B-2-A-3-A based on its technical description showed that Lot 23-A-4-B-2-A-3-A is the
lot being occupied by Uniwide.35 Baello claims that her Lot No. 3-A is the same as Lot 23-A-4-B-2-A-
3-A. However, the claim cannot be given credence because of the disparity of the lot description,
and the technical description of the land covered by Baellos title shows that it is not the same as the
technical description of the land covered by petitioners title. Moreover, the technical description of
the land covered by Baellos title, or the boundaries stated therein, are not the same as those
indicated in the survey plans36 which she adduced in evidence. Since Baellos title covers a different
property, she cannot claim a superior right over the subject property on the ground that she
registered her title ahead of petitioner.

As petitioner has proven that its title covers the property in dispute, it is entitled to recover the
possession thereof, the basis of which shall be discussed subsequently. The recovery of possession
of the subject property by petitioner is not dependent on first proving the allegation that Baellos title
is spurious and the annulment of Baellos title, since Baellos title does not cover the subject property
and petitioner has proven its title over the subject property and the identity of the property.
 Page 45 of 68

Petitioner contends that the Court of Appeals erred in treating its complaint as one only for
annulment. It asserts that it prayed not only for annulment of Baellos title, but also for the
reconveyance of Lot 23-A-4-B-2-A-3-B of subdivision plan Psd 706, which was the subject of lease
between lessee Uniwide and lessor Baello, and over which property Baello claims
ownership. Petitioner contends that reconveyance is in order as it has complied with the requisites of
reconveyance under Article 434 of the Civil Code, thus:

Art. 434. In an action to recover, the property must be identified, and the plaintiff must rely on the
strength of his title and not on the weakness of the defendants claim.

Petitioners contention is meritorious.

Article 434 of the Civil Code provides that to successfully maintain an action to recover the
ownership of a real property, the person who claims a better right to it must prove two (2) things:
first, the identity of the land claimed, and; second, his title thereto.37

In regard to the first requisite, in an accion reinvindicatoria, the person who claims that he has a
better right to the property must first fix the identity of the land he is claiming by describing the
location, area and boundaries thereof.38

In this case, petitioner proved the identity of the land it is claiming through the technical description
contained in its title, TCT No. T-285312; the derivative title of Felisa D. Bonifacio, TCT No. 265777;
the technical description39included in the official records of the subject lot in the Register of Deeds of
Caloocan City; and the verification survey conducted by Geodetic Engineer Evelyn Celzo of the
DENR-NCR.

This conclusion is further supported by the finding of the trial court, thus:

The technical description of a titled lot registered under the Torrens system should appear on the
face of the title. x x x Exhibits "F," "F-1" (Technical description of the land appearing in plaintiff VSDs
title, Exh. "A") was acknowledged by the representative of the Register of Deeds as part of the
records of TCT No. 28512. As testified by Engr. Evelyn G. Celzo of the DENR, NCR, the same
certification was also established as stated in L.R.C. 3288, a technical description as approved and
recorded in DENR, NCR. The technical description appearing in plaintiffs title shows the precise
measurement, boundaries and location of the plaintiffs property. These measurements/metes and
bounds confirm the averments made by the plaintiff that the title of defendant Baello does not even
clearly show where the land is located.

Defendant BAELLO claimed that the technical description appearing on plaintiffs title belonged to
her. In support of her claim, she submitted Exhibits "2," "3," "3-B." Exhibits "3" and "3-B" were Survey
Plans alleged to have been as prepared the Technical Description for TCT No. (35186) 12754.
Firstly, the technical description appearing on her title is not the technical description alleged to be
Exhibit "4," which is the plan of Psd 706, Lot 23-A-4-B-2-A-3-A. Secondly, Exhibit "4," which she
submitted separately from the title, was not established by any competent witness. Said Exhibits
could only be considered as part of the testimony of defendant Baello, and not proof of the matters
averred in said exhibits. No other witness was presented to testify on BAELLOs claim to her
technical description, being claimed. x x x40

In addition, petitioner proved its title over the property by presenting in evidence its title, TCT No. T-
285312, which describes the metes and bounds of the subject lot covered therein, that is Lot 23-A-4-
B-2-A-3-A of the subdivision plan Psd-706, which lot was acquired by VSD from Felisa D. Bonifacio,
as evidenced by a Deed of Absolute Sale.41
 Page 46 of 68

A background of the ownership of Felisa D. Bonifacio over Lot No. 23-A-4-B-2-A-3-A of the
subdivision plan Psd-706 is contained in the Order42 dated October 8, 1992 of Judge Geronimo S.
Mangay in LRC Case No. C-3288,43granting Felisa D. Bonifacios petition44 for authority to segregate
an area of 5,680.1 square meters covering Lot 23-A-4-B-2-A-3-A and Lot 23-A-4-B-2-A-3-B, Psd 706
(PSU-2345) of the Maysilo Estate, and for issuance of a separate certificate of title in the name of
Felisa D. Bonifacio. The Order dated October 8, 1992 stated that from the evidence presented, the
court found that in Case No. 4557 for Petition for Substitution of Names, in the then Court of First
Instance of Rizal, Branch 1, the then Presiding Judge Cecilia Muoz Palma issued an Order dated
May 25, 1962 substituting Maria de la Concepcion Vidal as one of the registered owners of several
parcels of land forming the Maysilo Estate and covered by, among others, OCT No. 994 of the
Register of Deeds of Rizal with, among others, Eleuteria Rivera Bonifacio to the extent of 1/6 of 1-
189/1,000 percent of the entire Maysilo Estate.45

Moreover, the Order dated October 8, 1992 stated that Eleuteria Rivera Bonifacio executed in favor
of Felisa D. Bonifacio a Deed of Assignment assigning all her rights and interests over Lot 23-A-4-B-
2-A-3-A and Lot 23-A-4-B-2-A-3-B, both of Psd 706 and covered by OCT No. 994 of the Register of
Deeds of Rizal.46 It stated that even prior to the execution of the Deed of Assignment, but while
negotiations with Eleuteria Rivera Bonifacio were ongoing, Felisa Bonifacio already requested the
Lands Management Sector, DENR-NCR, to prepare and issue the technical descriptions of the two
lots. Upon the finality of the Order and the payment of the prescribed fees, if any, and presentation
of clearances of the said lots, the Register of Deeds of Caloocan City was ordered to issue a new
transfer certificate of title in the name of Felisa D. Bonifacio over Lot 23-A-4-B-2-A-3-A and Lot 23-A-
4-B-2-A-3-B, both on Psd 706 of OCT No. 994 of the Register of Deeds of Rizal.47

The evidence of petitioner, consisting of its Torrens title (TCT No. T-285312) and the derivativetitle
of Felisa D. Bonifacio (TCT No. 265777), the technical description issued by the DENR for the
segregation of the property of Felisa D. Bonifacio in LRC Case No. C-3288, and the testimonies of
DENR representatives, show that the title of petitioner covers the property therein referred to as Lot
23-A-4-B-2-A-3-A, which is being occupied by Uniwide.

Hutchison v. Buscas48 held:

x x x It bears stress that in an action to recover real property, the settled rule is that the plaintiff must
rely on the strength of his title, not on the weakness of the defendants title. This requirement is
based on two (2) reasons: first, it is possible that neither the plaintiff nor the defendant is the true
owner of the property in dispute, and second, the burden of proof lies on the party who substantially
asserts the affirmative of an issue for he who relies upon the existence of a fact should be called
upon to prove that fact. x x x

In this case, petitioner proved his title over the property in dispute as well as the identity of the said
property; hence, it is entitled to recover the possession of the property from respondents.

Considering that Uniwide constructed a building on the subject parcel of land, is Uniwide entitled to
recover from VSD the cost of its improvement on the land?

It is noted that when the contract of lease was executed, Uniwide was unaware that the property
leased by it was owned by another person other than Dolores Baello. Nevertheless, Uniwide cannot
avail of the rights of a builder in good faith under Article 44849 of the Civil Code, in relation to Article
546 of the same Code, which provides for full reimbursement of useful improvements and retention
of the premises until reimbursement is made, as the said provisions apply only to a possessor in
good faith who builds on land with the belief that he is the owner thereof.50 It does not apply where
ones only interest is that of a lessee under a rental contract.51
 Page 47 of 68

Parilla v. Pilar 52 held:

Jurisprudence is replete with cases which categorically declare that Article 448 covers only cases in
which the builders, sowers or planters believe themselves to be owners of the land or, at least, have
a claim of title thereto, but not when the interest is merely that of a holder, such as a mere tenant,
agent or usufructuary. A tenant cannot be said to be a builder in good faith as he has no pretension
to be owner.

In a plethora of cases, this Court has held that Articles 448 of the Civil Code, in relation to Article 546
of the same Code, which allows full reimbursement of useful improvements and retention of the
premises until reimbursement is made, applies only to a possessor in good faith, i.e., one who builds
on land with the belief that he is the owner thereof. It does not apply where ones only interest is that
of a lessee under a rental contract; otherwise, it would always be in the power of the tenant to
"improve" his landlord out of his property. (Italics supplied)53

Based on the foregoing, Uniwide cannot recover the cost of its improvement on the land from VSD
under Article 448 of the Civil Code.

Further, petitioner prays that the Decision of the Court of Appeals be reversed and the Decision of
the trial court be reinstated. An examination of the dispositive portion of the trial courts decision
shows that some modifications are in order.

First, the trial court declared the title of respondent Dolores Baello, TCT No. (35788) 12754, to be
null and void.

The Court, however, holds that the title of respondent Dolores Baello cannot be nullified, because
the records show that petitioner failed to present any proof that the title was issued through fraud,
and Baellos title covers a different property from that described in petitioners title.
1wphi1

Second, the trial court ordered respondents Baello and Uniwide to pay, jointly and severally, a just
and reasonable compensation of P1,200,000.00 per month with legal interest for the occupancy and
use of petitioners land from the time petitioner acquired ownership of the land on

September 12, 1994 until the land is actually vacated by respondents.

The Court notes that the trial court did not state in its decision how it determined the amount of P1.2
million as monthly compensation for the occupation and use of petitioners property from the time
petitioner acquired ownership of the property until it is vacated by respondents, particularly Uniwide
which is in possession of the property. Although petitioner, in its Complaint, prayed for the payment
of P1.5 million as compensation for the occupancy and use of the subject property, it did not present
evidence to prove that it is entitled to such amount. The only basis for compensation for the use of
the subject property is the contract of lease between Uniwide and Dolores Baello covering a period
of 25 years from July 1, 1988 to June 30, 2013,54 renewable for another 25 years, with the
agreement that upon termination of the lease, the ownership of whatever buildings and
improvements constructed by the lessee on the leased premises shall automatically be owned by
the lessor.55 The lease contract provides payment of rent in the amount of P700,000.00 per
annum,56 or a monthly rental of P58,333.30. The Court holds that the payment of P58,333.30 per
month is a reasonable compensation for the occupation and use by respondents of the subject
property from the time petitioner acquired ownership of the land on September 12, 1994. The
monthly compensation of P58,333.30 shall earn an interest of six percent (6% ) per annum57 from
the filing of the Complaint on June 8, 199558 until the award is final and executory, after which the
 Page 48 of 68

interest rate shall be 12 percent (12%) per annum from the date the award becomes final and
executory until fully paid.59

However, Uniwide should not be made to pay jointly and severally with Baello just compensation for
the occupancy and use of petitioners land from June 8, 1995, the date of the filing of the complaint,
up to the finality of this Decision, since Uniwide already paid rentals to Baello. However, Baello and
Uniwide may be held jointly and severally liable to VSD for the payment of rentals from the finality of
this Decision until the possession of the subject property is returned to VSD, since Uniwide would
not yet have paid rentals during that time.

Third, the trial court awarded attorneys fees to petitioner.

The Court holds that the trial court erred in awarding attorneys fees in the amount of P200,000.00 to
petitioner as it failed to state in the body of its decision the basis for such award.60 The power of
courts to grant attorneys fees demands factual, legal and equitable justification; its basis cannot be
left to speculation or conjecture.61

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated May 30, 2005
and its Resolution dated December 6, 2005, in CA-G.R. CV No. 69824, are REVERSED and SET
ASIDE. The Decision of the Regional Trial Court of Caloocan City, Branch 126, in Civil Case No. C-
16933 is REINSTATED with MODIFICATION as follows:

(1) Paragraph 1 of the dispositive portion of the Decision dated October 2, 2000 of the
Regional Trial Court of Caloocan City, Branch 126, in Civil Case No. C-16933, is deleted;

(2) Respondent Dolores Baello and all persons/entities claiming title under her, including
respondent Uniwide Sales, Inc., are ordered to convey and to return the property or the lot
covered by TCT No. T-285312 to petitioner VSD Realty and Development Corporation upon
finality of this Decision;

(3) Respondent Dolores Baello is ordered to pay just and reasonable compensation for the
occupancy and use of the land of petitioner VSD Realty and Development Corporation in the
amount of P58,333.30 per month from September 12, 1994 until the Decision is final and
executory, with legal interest of six percent (6%) per annum reckoned from the filing of the
Complaint on June 8, 1995 until the finality of this Decision. Thereafter, respondent Uniwide
Sales, Inc. is jointly and severally liable with Dolores Baello for the payment to petitioner
VSD Realty and Development Corporation of monthly rental in the amount of P58,333.30
from the finality of this Decision until the land is actually vacated, with twelve percent (12%)
interest per annum.

(4) The award of attorney's fees is deleted.

No costs.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

SECOND DIVISION
 Page 49 of 68

G.R. No. 153951. July 29, 2005

PHILIPPINE NATIONAL BANK, Petitioners,

vs.
SANAO MARKETING CORPORATION, SPOUSES AMADO A. SANAO and SOLEDAD F.
SANAO and SPOUSES WILLIAM (Willy) F. SANAO and HELEN SANAO and the COURT OF
APPEALS, Respondents.

DECISION

TINGA, J.:

Before the Court is a Petition for Review1 under Rule 45 of the Rules of Court, wherein petitioner
Philippine National Bank (PNB) seeks the review of the Decision2 rendered by the Court of Appeals
Thirteenth Division in C.A. G.R. SP No. 63162. The assailed Decision nullified two orders3 of the
Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32, which respectively granted PNBs
petition for issuance of a writ of possession over seven (7) parcels of land and directed the execution
pending appeal of such writ of possession.

The antecedents are as follows:

In July 1997, Sanao Marketing Corporation, the spouses Amado A. Sanao and Soledad F. Sanao
and the spouses William (Willy) F. Sanao and Helen Sanao (all respondents herein), as joint and
solidary debtors, obtained a loan in the amount of One Hundred Fifty Million Pesos
(P150,000,000.00) from PNB secured by a real estate mortgage of several parcels of land situated
in the municipalities of Pili, Tigaon and Camaligan, all of Camarines Sur, and Naga City.4 The
contract expressly provided that the mortgage shall be governed by the provisions of Act No. 3135,
as amended.5 The pertinent portions of said contract provide that:

....

F. FORECLOSURE, POWER OF ATTORNEY, RECEIVERSHIP

If at any time the Mortgagors fail or refuse to pay the obligation herein secured, or any of the
amortization of such indebtedness when due, or to comply with any of the conditions and stipulations
herein agreed, or shall during the time this mortgage is in force, institute insolvency proceedings or
be involuntarily declared insolvent, or shall use the proceeds of this loan for purposes other than
those specified herein, or if the mortgage cannot be recorded in or the Mortgagors fail to register the
same with the corresponding Registry of Deeds, then all the obligations of the Mortgagors secured
by this mortgage and all the amortization thereof shall immediately become due, payable and
defaulted and the Mortgagee may immediately foreclose this mortgage judicially in accordance with
the Rules of Court, or extrajudicially in accordance with Act No. 3135, as amended, and P.D. 385.
For the purpose of extrajudicial foreclosure, the Mortgagors hereby appoint the Mortgagee their
Attorney-in-Fact to sell the properties mortgaged under Act No. 3135, as amended, to sign all
documents and perform any act requisite and necessary to accomplish said purpose and to appoint
its substitute as Attorney-in-Fact with the same powers as above specified. In case of judicial
foreclosure, the Mortgagors hereby consent to the appointment of the Mortgagee or of any of its
employees as receiver, without any bond, to take charge of the mortgaged properties at once, and to
hold possession of the same and the rents, benefits and profits derived from the mortgaged
properties before the sale, less costs and expenses of the receivership. . . . 6
 Page 50 of 68

For failure of respondents to fully pay the loan upon its maturity, PNB caused the extrajudicial
foreclosure of the mortgage through a certain Atty. Marvel C. Clavecilla (Atty. Clavecilla), a notary
public for and in the City of Naga. The Notice of Extra-Judicial Foreclosure Sale announced that the
sale of 13 titles consisting of 14 parcels of land located in Camarines Sur and Naga City is
scheduled on 22 March 1999 at nine oclock in the morning or soon thereafter, at the entrance of the
Municipal Court of Pili, Camarines Sur. This notice was published in the 7, 14 and 21 February 1999
issues of the Vox Bikol- a weekly tabloid published every Sunday and circulated in the Bicol region
and continents with Bicol communities.7

Thereafter, Atty. Clavecilla executed a Provisional Certificate of Sale8 dated 26 April 1999 certifying
that on the 22nd day of March 1999, at exactly ten oclock in the morning, he sold at a public auction
at the "lobby/main entrance of the Regional Trial Court, Hall of Justice, Naga City" the mortgaged
properties to PNB for Two Hundred Thirteen Million One Hundred Sixty-Two Thousand Seven
Hundred Eighty- Seven and Fifty Centavos (P213,162,787.50), which amount the latter considered
as payment pro tanto of petitioners loan.9 This Provisional Certificate of Sale was registered with the
Registry of Deeds of Camarines Sur on 3 May 1999 and with the Registry of Deeds of Naga City on
16 June 1999 for the properties respectively covered by their registries.10

On 26 April 2000, respondents Amado A. Sanao and Sanao Marketing Corporation filed a
complaint11 with the RTC of Naga City, Branch 61, against PNB, the Register of Deeds of the City of
Naga and the Province of Camarines Sur, and Atty. Clavecilla, for the court to declare
the Provisional Certificate of Sale and the auction and foreclosure proceedings null and void.12

On 11 August 2000, PNB filed with the RTC of Pili, Camarines Sur, Branch 32, a petition for the
issuance of a writ of possession, docketed therein as Spec. Proc. P-1182, over the properties
located in Pili that are covered by Transfer Certificates of Title Nos. 21448, 24221, 14133, 15218,
15489, 13856, 15216.13

To the petition, respondents Amado A. Sanao and Sanao Marketing Corporation interposed an
answer in opposition, with special and affirmative defenses.14

PNB countered with its comments/reply to opposition.15

On 24 November 2000, the RTC of Pili issued its first assailed order,16 granting the writ of
possession prayed for by PNB.

Amado A. Sanao and Sanao Marketing Corporation filed a Motion for Reconsideration w/ Opposition
to the Motion for Execution Pending Appeal,17 which was denied per the second assailed
order18 dated 24 January 2001 of the RTC of Pili.19

Respondents then filed a Petition20 for certiorari and prohibition under Rule 65 of the Rules of
Court before the Court of Appeals, imputing grave abuse of discretion on the part of the RTC of Pili
in the issuance of the two assailed orders. The Petition likewise prayed for the issuance of a
temporary restraining order which the Court of Appeals granted on 15 February 2001, enjoining the
RTC of Pili and PNB from implementing the challenged orders.

In their Memorandum,21 respondents pointed out that the PNB had allegedly failed to submit the
application for extrajudicial foreclosure of mortgage to the proper clerk of court after payment of the
filing fee, in contravention of Supreme Court Administrative Order No. 3 and Administrative Circular
No. 3-98. In addition, respondents averred that the foreclosure sale was null and void as it was done
at the lobby/main entrance of the RTC Hall of Justice, Naga City and not at the entrance of the
Municipal Trial Court of Pili, Camarines Sur as published.22
 Page 51 of 68

PNB, on the other hand, posited that the invoked administrative order is not applicable as
extrajudicial proceedings conducted by a notary public, as in the case at bar, do not fall within the
contemplation of the directive.23

With regard to the variance of the venues of the auction sale as published in Vox Bikol and as
recorded in the Provisional Certificate of Sale, PNB asserted that there was no violation of Act No.
313524 or of the terms of the real estate mortgage contract,25 as the sale of the mortgaged properties
located in Camarines Sur were held in Naga City which is well within the territorial jurisdiction of said
province.26

The Court of Appeals ruled in favor of herein respondents.27 The Court of Appeals rendered a litany
of lapses that the notary public committed in the conduct of the foreclosure proceedings which in its
estimation had effectively undermined the soundness of the foreclosure sale. Accordingly, the Court
of Appeals held that the Provisional Certificate of Sale, upon which the issuance of the writ of
possession was based, is fatally infirm, and that consequently, the writ of possession was not validly
issued as the procedural requirements for its issuance were not satisfied.28

Thus, the Court of Appeals declared null and void the two assailed orders of the RTC of Pili for
having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.29

Aggrieved by the Decision, PNB filed the instant petition, arguing in the main that in nullifying the
orders of the RTC of Pili, the Court of Appeals departed from the accepted and usual course of
judicial proceedings as the issuance of writs of possession is purely ministerial on the part of the trial
court.30

In their comment,31 respondents point out that the instant petition should not be given due course as
it is not sufficient in form and substance. Respondents proffered the following grounds, thus: (1)
there was no special of attorney or Board Resolution or Secretarys Certificate attached to the
petition which could serve as basis for the petitioners signatory Domitila A. Amon to verify or attest
to the truth of the allegations contained therein, in violation of existing laws and jurisprudence on the
matter; (2) petitioners failed to move for a reconsideration of the assailed Decision of the Court of
Appeals; (3) petitioners failed to disclose another similar case involving the same legal issues now
pending in the Twelfth Division of the Court of Appeals, docketed as C.A. G.R. CV No. 73718, which
is an appeal from an original petition for issuance of writ of possession filed by the same petitioner
before the RTC of San Jose, Camarines Sur, Branch 58; (4) petitioner failed to furnish the Twelfth
Division of the Court of Appeals a copy of the petition in C.A. G.R. No. 73718 pending therein, in
violation of Section 5, Rule 7 of the 1997 Rules of Civil Procedure, which failure could lead to
conflicting resolutions, between two divisions of the Court of Appeals and to the giving of inadequate
information to the Supreme Court; and (5) the petition was only accompanied by Annexes A, B, C, D
and E, which annexes do not satisfy the requirements laid down in Sections 4 and 5 of Rule 45 of
the Rules of Court.32

Respondents also reiterate that the PNB in the conduct of the extrajudicial foreclosure proceedings
did not comply with Administrative Order No. 3 and Administrative Circular No. 3-98, and that the
notice of publication was not sufficient to justify the execution of the Provisional Certificate of Sale.33

Traversing the alleged procedural errors, PNB in its Reply34 raise the following arguments:

First, Mrs. Domitila A. Amon had authority to sign and verify its petition under Board Resolution No.
15 dated 8 October 1997,35 in line with her authority to prosecute and defend cases for and/or
against the bank.36
 Page 52 of 68

Second, there are exceptions to the general rule that a motion for reconsideration must first be filed
before elevating a case to a higher court. PNB insists that the Decision of the Court of Appeals is a
patent nullity as it runs counter to the provisions of Act No. 3135 and existing jurisprudence stating
that Administrative Order No. 3 covers judicial foreclosures.37 As such, the filing of a motion for
reconsideration prior to elevating the case on certiorari may be dispensed with.

Lastly, the case which according to respondents is not mentioned in the certification of non-forum
shopping was commenced by respondents themselves, not PNB, and that the issues similar to those
in the instant case have yet to be raised in respondents appeal to the Court of Appeals. Moreover,
the subject matter and the properties involved in the other case are altogether different.38

There is merit in the petition.

A writ of possession is "a writ of execution employed to enforce a judgment to recover the
possession of land. It commands the sheriff to enter the land and give possession of it to the person
entitled under the judgment."39

A writ of possession may be issued under the following instances:40 (1)in land registration
proceedings under Section 17 of Act 496;41 (2) in a judicial foreclosure, provided the debtor is in
possession of the mortgaged realty and no third person, not a party to the foreclosure suit, had
intervened; (3) in an extrajudicial foreclosure of a real estate mortgage under Section 7 of Act No.
3135, as amended by Act No. 4118;42 and (4) in execution sales (last paragraph of Section 33, Rule
39 of the Rules of Court).43

The present case falls under the third instance. Under Section 7 of Act No. 3135, as amended by Act
No. 4118, a writ of possession may be issued either (1) within the one-year redemption period, upon
the filing of a bond, or (2) after the lapse of the redemption period, without need of a bond.44 Section
7 of Act No. 3135, as amended by Act No. 4118, provides:

SECTION 7. In any sale made under the provisions of this Act, the purchaser may petition the Court
of First Instance of the province or place where the property or any part thereof is situated, to give
him possession thereof during the redemption period, furnishing bond in an amount equivalent to the
use of the property for a period of twelve months, to indemnify the debtor in case it be shown that
the sale was made without violating the mortgage or without complying with the requirements of this
Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration
or cadastral proceedings if the property is registered, or in special proceedings in case of property
registered under the Mortgage Law or under section one hundred and ninety-four of the
Administrative Code, or of any other real property encumbered with a mortgage duly registered in
the office of any register of deeds in accordance with any existing law, and in each case the clerk of
court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section
one hundred and fourteen of Act Numbered Four hundred and ninety-six, and the court shall, upon
approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in
which the property is situated, who shall execute said order immediately.

Under the above-quoted provision, the purchaser in a foreclosure sale may apply for a writ of
possession during the redemption period by filing an ex parte motion under oath for that purpose in
the corresponding registration or cadastral proceeding in the case of property covered by a Torrens
title. Upon the filing of such motion and the approval of the corresponding bond, the law also in
express terms directs the court to issue the order for a writ of possession.45

A writ of possession may also be issued after consolidation of ownership of the property in the name
of the purchaser. It is settled that the buyer in a foreclosure sale becomes the absolute owner of the
 Page 53 of 68

property purchased if it is not redeemed during the period of one year after the registration of sale.
As such, he is entitled to the possession of the property and can demand it any time following the
consolidation of ownership in his name and the issuance of a new transfer certificate of title. In such
a case, the bond required in Section 7 of Act No. 3135 is no longer necessary. Possession of the
land then becomes an absolute right of the purchaser as confirmed owner. Upon proper application
and proof of title, the issuance of the writ of possession becomes a ministerial duty of the court.46 It
was held, thus:

As the purchaser of the properties in the extra-judicial foreclosure sale, the PNCB is entitled to a writ
of possession therefore. The law on extrajudicial foreclosure of mortgage provides that a purchaser
in an extrajudicial foreclosure sale may take possession of the foreclosed property even before the
expiration of the redemption period, provided he furnishes the necessary bond. Possession of the
property may be obtained by filing an ex parte motion with the regional trial court of the province or
place where the property is situated. Upon filing of the motion and the required bond, it becomes a
ministerial duty of the court to order the issuance of a writ of possession in favor of the purchaser.
After the expiration of the one-year period without redemption being effected by the property owner,
the right of the purchaser to the possession of the foreclosed property becomes absolute. The basis
of this right to possession is the purchasers ownership of the property. Mere filing of an ex
parte motion for the issuance of the writ of possession would suffice, and no bond is required.47

Any question regarding the regularity and validity of the sale, as well as the consequent cancellation
of the writ, is to be determined in a subsequent proceeding as outlined in Section 8 of Act No. 3135,
as amended by Act No. 4118. Such question is not to be raised as a justification for opposing the
issuance of the writ of possession, since, under the Act, the proceeding is ex parte.48

In case it is disputed that there was violation of the mortgage or that the procedural requirements for
the foreclosure sale were not followed, Section 8 of Act No. 3135, as amended by Act No. 4118,
provides, to wit:

SECTION 8. The debtor may, in the proceedings in which possession was requested, but not later
than thirty days after the purchaser was given possession, petition that the sale be set aside and the
writ of possession cancelled, specifying the damages suffered by him, because the mortgage was
not violated or the sale was not made in accordance with the provisions hereof, and the court shall
take cognizance of this petition in accordance with the summary procedure provided for in section
one hundred and twelve of Act Number Four hundred and ninety-six; and if it finds the complaint of
the debtor justified, it shall dispose in his favor of all or part of the bond furnished by the person who
obtained possession. Either of the parties may appeal from the order of the judge in accordance with
section fourteen of Act Numbered Four hundred and ninety-six; but the order of possession shall
continue in effect during the pendency of the appeal.

The law is clear that the purchaser must first be placed in possession. If the trial court later finds
merit in the petition to set aside the writ of possession, it shall dispose the bond furnished by the
purchaser in favor of the mortgagor. Thereafter, either party may appeal from the order of the judge.
The rationale for the mandate is to allow the purchaser to have possession of the foreclosed
property without delay, such possession being founded on his right of ownership.49

It has been consistently held that the duty of the trial court to grant a writ of possession is ministerial.
Such writ issues as a matter of course upon the filing of the proper motion and the approval of the
corresponding bond. The court neither exercises its official discretion nor judgment.50 The judge
issuing the order following these express provisions of law cannot be charged with having acted
without jurisdiction or with grave abuse of discretion.51 If only to stress the writs ministerial character,
we have, in previous cases, disallowed injunction to prohibit its issuance, just as we have held that
 Page 54 of 68

the issuance of the same may not be stayed by a pending action for annulment of mortgage or the
foreclosure itself.52

In the case at bar, PNB has sufficiently established its right to the writ of possession. It presented as
documentary exhibits the contract of real estate mortgage53 and the Provisional Certificate of
Sale54 on the face of which appears proof of its registration with the Registry of Deeds in Camarines
Sur on 3 May 1999. There is also no dispute that the lands were not redeemed within one year from
the registration of the Provisional Certificate of Sale. It should follow, therefore, that PNB has
acquired an absolute right, as purchaser, to the writ of possession. The RTC of Pili had the
ministerial duty to issue that writ, as it did actually, upon mere motion, conformably to Section 7 of
Act No. 3135, as amended.55

However on certiorari, the Court of Appeals declared null and void the orders of the RTC of Pili
granting the writ of possession and denying respondents motion for reconsideration. The Court of
Appeals exhaustively discussed the reasons for such a declaration, noting the procedural errors of
PNB in the conduct of the foreclosure proceedings which allegedly rendered the foreclosure sale
and the Provisional Certificate of Sale of doubtful validity.

The Court of Appeals relied on the case of Cometa v. Intermediate Appellate Court56 in holding that
"for a writ of possession to be validly issued . in an extrajudicial foreclosure proceeding, all the
procedural requirements should be complied with. Any flaw afflicting its stages could affect the
validity of its issuance."57 The Court of Appeals reproached the RTC of Pili Sur for granting the writ
despite the existence of these alleged procedural lapses.

This was erroneous. The judge to whom an application for writ of possession is filed need not look
into the validity of the mortgage or the manner of its foreclosure. In the issuance of a writ of
possession, no discretion is left to the trial court. Any question regarding the cancellation of the writ
or in respect of the validity and regularity of the public sale should be determined in a subsequent
proceeding as outlined in Section 8 of Act No. 3135.58

In fact, the question of the validity of the foreclosure proceedings can be threshed out in Civil Case
No. RTC 2000-00074, pending before the RTC of Naga City, Branch 61, which was filed by
respondents before PNB had filed a petition for the issuance of a writ of possession. The Court of
Appeals should not have ruled on factual issues on which the RTC of Naga had yet to make any
finding. Besides, a review of such factual matters is not proper in a petition for certiorari.

Having noted the foregoing, the Court dispenses with the need to discuss the soundness of the
foreclosure proceedings, the authenticity of the Provisional Certificate of Sale, and the applicability of
Supreme Court Administrative Order No. 3 and Administrative Circular No. 3-98. A review of the
foregoing matters properly lies within the jurisdiction of the RTC of Naga City, Branch 61.

It is worthy of note that the pendency of the case for annulment of the foreclosure proceedings is not
a bar to the issuance of the writ of possession.59 Pending such proceedings whose subject is the
validity of the foreclosure proceedings, the purchaser in a foreclosure sale is entitled to the
possession of property. Until such time the foreclosure sale is annulled, the issuance of the writ of
possession is ministerial on the part of the RTC of Pili.60

In addition, the Court of Appeals reliance on the case of Cometa61 is misplaced. The cited case
involved the issuance of a writ of possession following an execution sale. The declaration therein
that the issuance of said writ is dependent on the valid execution of the procedural stages preceding
it does not contemplate writs of possession available in extrajudicial foreclosures of real estate
mortgages under Section 7 of Act No. 3135, as amended by Act No. 4118.
 Page 55 of 68

Considering that the RTC of Pili issued the writ of possession in compliance with the provisions of
Act No. 3135, as amended, it cannot be charged with having acted in excess of its jurisdiction or with
grave abuse of discretion. Absent grave abuse of discretion, respondents should have filed an
ordinary appeal instead of a petition for certiorari. The soundness of the order granting the writ of
possession is a matter of judgment with respect to which the remedy is ordinary appeal. An error of
judgment committed by a court in the exercise of its legitimate jurisdiction is not the same as "grave
abuse of discretion." Errors of judgment are correctible by appeal, while those of jurisdiction are
reviewable by certiorari.62

Palpably, the Court of Appeals exceeded its jurisdiction when it granted respondents petition for
certiorari and set aside the orders dated 24 November 2000 and 24 January 2001 of the RTC of Pili
in Spec. Proc No. P-1182, and also when it made a determination as to the validity of the foreclosure
proceedings in clear violation of Act No. 3135. The contention, therefore, that the Court should not
entertain the instant petition until a motion for reconsideration has been filed may not hold water
where the proceeding in which the error occurred is a patent nullity. Thus, we hold that a motion for
reconsideration may be dispensed with in the instant case.63

Anent the other procedural grounds for the denial of the instant petition, suffice it to say that PNBs
rejoinder has sufficiently refuted respondents assertions. We find and so hold that there was
substantial compliance with the procedural requirements of the Court.

Although belatedly filed, the Resolution of the PNB Board amply demonstrates Mrs. Domitila A.
Amons authority to sign and verify the instant petition. PNB likewise was not obligated to disclose
the alluded case pending before the Court of Appeals as it was not initiated by the bank and, more
importantly, the subject matter and the properties involved therein are altogether different.64 It is well
to remember at this point that rules of procedure are but mere tools designed to facilitate the
attainment of justice. Their strict and rigid application which would result in technicalities that tend to
frustrate rather than promote substantial justice, must always be avoided.65 In proper cases,
procedural rules may be relaxed or suspended in the interest of substantial justice.66 And the power
of the Court to except a particular case from its rules whenever the purposes of justice require it
cannot be questioned.67

WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated 11
June 2002 in CA-G.R. S.P. No. 63162 is REVERSED and SET ASIDE. The orders dated 24
November 2000 and 24 January 2001 of the Regional Trial Court of Pili, Camarines Sur, Branch 32
in Spec. Pro. No. P-1182 directing the issuance of a writ of possession in favor of PNB are
AFFIRMED.

SO ORDERED.

Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

SECOND DIVISION

G.R. No. 142668 August 31, 2004

UNITED COCONUT PLANTERS BANK and LUIS MA. ONGSIAPCO, petitioners,

vs.
RUBEN E. BASCO, respondent.
 Page 56 of 68

DECISION

CALLEJO, SR., J.:

This is a petition for review on certiorari assailing the Decision1 of the Court of Appeals dated March
30, 2000, affirming, with modifications, the Decision2 of the Regional Trial Court (RTC), Makati City,
Branch 146, which found the petitioner bank liable for payment of damages and attorney's fees.

The Case for the Respondent

Respondent Ruben E. Basco had been employed with the petitioner United Coconut Planters Bank
(UCPB) for seventeen (17) years.3 He was also a stockholder thereof and owned 804 common
shares of stock at the par value of P1.00.4 He likewise maintained a checking account with the bank
at its Las Pias Branch under Account No. 117-001520-6.5 Aside from his employment with the
bank, the respondent also worked as an underwriter at the United Coconut Planters Life Association
(Coco Life), a subsidiary of UCPB since December, 1992.6 The respondent also solicited insurance
policies from UCPB employees.

On June 19, 1995, the respondent received a letter from the UCPB informing him of the termination
of his employment with the bank for grave abuse of discretion and authority, and breach of trust in
the conduct of his job as Bank Operations Manager of its Olongapo Branch. The respondent
thereafter filed a complaint for illegal dismissal, non-payment of salaries, and damages against the
bank in the National Labor Relations Commission (NLRC), docketed as NLRC Cases Nos. 00-09-
05354-92 and 00-09-05354-93. However, the respondent still frequented the UCPB main office in
Makati City to solicit insurance policies from the employees thereat. He also discussed the complaint
he filed against the bank with the said employees.7

The respondent was also employed by All-Asia Life Insurance Company as an underwriter. At one
time, the lawyers of the UCPB had an informal conference with him at the head office of the bank,
during which the respondent was offered money so that the case could be amicably settled. The
respondent revealed the incident to some of the bank employees.8

On November 15, 1995, Luis Ma. Ongsiapco, UCPB First Vice-President, Human Resource Division,
issued a Memorandum to Jesus Belanio, the Vice-President of the Security Department, informing
him that the respondent's employment had been terminated as of June 19, 1995, that the latter filed
charges against the bank and that the case was still on-going. Ongsiapco instructed Belanio not to
allow the respondent access to all bank premises.9Attached to the Memorandum was a passport-
size picture of the respondent. The next day, the security guards on duty were directed to strictly
impose the security procedure in conformity with Ongsiapco's Memorandum.10

On December 7, 1995, the respondent, through counsel, wrote Ongsiapco, requesting that such
Memorandum be reconsidered, and that he be allowed entry into the bank premises.11 His counsel
emphasized that
 Page 57 of 68

In the meantime, we are more concerned with your denying Mr. Basco "access to all bank
premises." As you may know, he is currently connected with Cocolife as insurance agent.
Given his 17-year tenure with your bank, he has established good relationships with many
UCPB employees, who comprise the main source of his solicitations. In thecourse of his
work as insurance agent, he needs free access to your bank premises, within reason, to add
the unnecessary. Your memorandum has effectively curtailed his livelihood and he is once
again becoming a victim of another "illegal termination," so to speak. And Shakespeare said:
"You take his life when you do take the means whereby he lives."

Mr. Basco's work as an insurance agent directly benefits UCPB, Cocolife's mother company.
He performs his work in your premises peacefully without causing any disruption of bank
operations. To deny him access to your premises for no reason except the pendency of the
labor case, the outcome of which is still in doubt his liability, if any, certainly has not been
proven is a clear abuse of right in violation of our client's rights. Denying him access to the
bank, which is of a quasi-public nature, is an undue restriction on his freedom of movement
and right to make a livelihood, comprising gross violations of his basic human rights. (This is
Human Rights Week, ironically).

We understand that Mr. Basco has been a stockholder of record of 804 common shares of
the capital stock of UCPB since July 1983. As such, he certainly deserves better treatment
than the one he has been receiving from your office regarding property he partly owns. He is
a particle of corporate sovereignty. We doubt that you can impose the functional equivalent
of the penalty of destierro on our client who really wishes only to keep his small place in the
sun, to survive and breathe. No activity can be more legitimate than to toil for a living. Let us
live and let live.12

In his reply dated December 12, 1995, Ongsiapco informed the respondent that his request could
not be granted:

As you understand, we are a banking institution; and as such, we deal with matters involving
confidences of clients. This is among the many reasons why we, as a matter of policy, do not
allow non-employees to have free access to areas where our employees work. Of course,
there are places where visitors may meet our officers and employees to discuss business
matters; unfortunately, we have limited areas where our officers and employees can
entertain non-official matters.

Furthermore, in keeping with good business practices, the Bank prohibits solicitation,
peddling and selling of goods, service and other commodities within its premises as it
disrupts the efficient performance and function of the employees.

Please be assured that it is farthest from our intention to discriminate against your client. In
the same vein, it is highly improper for us to carve exceptions to our policies simply to
accommodate your client's business ventures.13

The respondent was undaunted. At 5:30 p.m. of December 21, 1995, he went to the office of Junne
Cacay, the Assistant Manager of the Makati Branch. Cacay was then having a conference with Bong
Braganza, an officer of the UCPB Sucat Branch. Cacay entertained the respondent although the
latter did have an appointment. Cacay even informed him that he had a friend who wanted to
procure an insurance policy.14 Momentarily, a security guard of the bank approached the respondent
and told him that it was already past office hours. He was also reminded not to stay longer than he
should in the bank premises.15 Cacay told the guard that the respondent would be leaving
shortly.16 The respondent was embarrassed and told Cacay that he was already leaving.17
 Page 58 of 68

At 1:30 p.m. of January 31, 1996, the respondent went to the UCPB Makati Branch to receive a
check from Rene Jolo, a bank employee, and to deposit money with the bank for a friend.18 He
seated himself on a sofa fronting the teller's booth19 where other people were also
seated.20 Meanwhile, two security guards approached the respondent. The guards showed him the
Ongsiapco's Memorandum and told him to leave the bank premises. The respondent pleaded that
he be allowed to finish his transaction before leaving. One of the security guards contacted the
management and was told to allow the respondent to finish his transaction with the bank.

Momentarily, Jose Regino Casil, an employee of the bank who was in the 7th floor of the building,
was asked by Rene Jolo to bring a check to the respondent, who was waiting in the lobby in front of
the teller's booth.21 Casil agreed and went down to the ground floor of the building, through the
elevator. He was standing in the working area near the Automated Teller Machine (ATM) Section22 in
the ground floor when he saw the respondent standing near the sofa23 near the two security
guards.24 He motioned the respondent to come and get the check, but the security guard tapped the
respondent on the shoulder and prevented the latter from approaching Casil. The latter then walked
towards the respondent and handed him the check from Jolo.

Before leaving, the respondent requested the security guard to log his presence in the logbook. The
guard did as requested and the respondent's presence was recorded in the logbook.25

On March 11, 1996, the respondent filed a complaint for damages against the petitioners UCPB and
Ongsiapco in the RTC of Manila, alleging inter alia, that

12. It is readily apparent from this exchange of correspondence that defendant bank''
acknowledged reason for barring plaintiff from its premises - the pending labor case is a
mere pretense for its real vindictive and invidious intent: to prevent plaintiff, and plaintiff
alone, from carrying out his trade as an insurance agent among defendant bank's
employees, a practice openly and commonly allowed and tolerated (encouraged even, for
some favored proverbial sacred cows) in the bank premises, now being unjustly denied to
plaintiff on spurious grounds.

13. Defendants, to this day, have refused to act on plaintiff's claim to be allowed even in only
the "limited areas where [the bank's] officers and employees can entertain non-official
matters" and have maintained the policy banning plaintiff from all bank premises. As he had
dared exercised his legal right to question his dismissal, he is being penalized with a
variation of destierro, available in criminal cases where the standard however, after proper
hearing, is much more stringent and based on more noble grounds than mere pique or
vindictiveness.

14. This appallingly discriminatory policy resulted in an incident on January 31, 1996 at 1:30
p.m. at defendant bank's branch located at its head office, which caused plaintiff tremendous
undeserved humiliation, embarrassment, and loss of face.26

15. Defendants' memorandum and the consequent acts of defendants' security guards,
together with defendant Ongsiapco's disingenuous letter of December 12, 1995, are
suggestive of malice and bad faith in derogation of plaintiff's right and dignity as a human
being and citizen of this country, which acts have caused him considerable undeserved
embarrassment. Even if defendants, for the sake of argument, may be acting within their
rights, they cannot exercise same abusively, as they must, always, act with justice and in
good faith, and give plaintiff his due.27
 Page 59 of 68

The respondent prayed that, after trial, judgment be rendered in his favor, as follows:

WHEREFORE, it is respectfully prayed that judgment issue ordering defendants:

1. To rescind the directive to its agents barring plaintiff from all bank premises as embodied
in the memorandum of November 15, 1995, and allow plaintiff access to the premises of
defendant bank, including all its branches, which are open to members of the general public,
during reasonable hours, to be able to conduct lawful business without being subject to
invidious discrimination; and

2. To pay plaintiff P100,000.00 as moral damages, P100,000.00 as exemplary damages,

and P50,000.00 by way of attorney's fees.

Plaintiff likewise prays for costs, interest, the disbursements of this action, and such other
further relief as may be deemed just and equitable in the premises.28

In their Answer to the complaint, the petitioners interposed the following affirmative defenses:

9. Plaintiff had been employed as Branch Operations Officer, Olongapo Branch, of defendant
United Coconut Planters Bank.

In or about the period May to June 1992, he was, together with other fellow officers and
employees, investigated by the bank in connection with various anomalies. As a result of the
investigation, plaintiff was recommended terminated on findings of fraud and abuse of
discretion in the performance of his work. He was found by the bank's Committee on
Employee Discipline to have been guilty of committing or taking part in the commission of the
following:

a. Abuse of discretion in connection with actions taken beyond or outside the limits of
his authority.

b. Borrowing money from a bank client.

c. Gross negligence or dereliction of duty in the implementation of bank policies or

valid orders from management.

d. Direct refusal or willful failure to perform, or delay in performing, an assigned task.

e. Fraud or willful breach of trust in the conduct of his work.

f. Falsification or forgery of bank records/documents.

10. Plaintiff thereafter decided to contest his termination by filing an action for illegal
dismissal against the bank.

Despite the pendency of this litigation, plaintiff was reported visiting employees of the bank in
their place of work during work hours, and circulating false information concerning the status
of his case against the bank, including alleged offers by management of a monetary
settlement for his "illegal dismissal."
 Page 60 of 68

11. Defendants acted to protect the bank's interest by preventing plaintiff's access to the
bank's offices, and at the same time informing him of that decision.

Plaintiff purported to insist on seeing and talking to the bank's employees despite this
decision, claiming he needed to do this in connection with his insurance solicitation activities,
but the bank has not reconsidered.

12. The complaint states, and plaintiff has, no cause of action against defendants.29

The petitioners likewise interposed compulsory counterclaims for damages.

The Case for the Petitioners

The petitioners adduced evidence that a day or so before November 15, 1995, petitioner Ongsiapco
was at the 10thfloor of the main office of the bank where the training room of the Management
Development Training Office was located. Some of the bank's management employees were then
undergoing training. The bank also kept important records in the said floor. When Ongsiapco passed
by, he saw the respondent talking to some of the trainees. Ongsiapco was surprised because non-
participants in the training were not supposed to be in the premises.30Besides, the respondent had
been dismissed and had filed complaints against the bank with the NLRC. Ongsiapco was worried
that bank records could be purloined and employees could be hurt.

The next day, Ongsiapco contacted the training supervisor and inquired why the respondent was in
the training room the day before. The supervisor replied that he did not know why.31 Thus, on
November 15, 1995, Ongsiapco issued a Memorandum to Belanio, the Vice-President for Security
Services, directing the latter not to allow the respondent access to the bank premises near the
working area.32 The said Memorandum was circulated by the Chief of Security to the security guards
and bank employees.

At about 12:30 p.m. on January 31, 1996, Security Guard Raul Caspe, a substitute for the regular
guard who was on leave, noticed the respondent seated on the sofa in front of the teller's
booth.33 Caspe notified his superior of the respondent's presence, and was instructed not to confront
the respondent if the latter was going to make a deposit or withdrawal.34 Caspe was also instructed
not to allow the respondent to go to the upper floors of the building.35The respondent went to the
teller's booth and, after a while, seated himself anew on the sofa. Momentarily, Caspe noticed Casil,
another employee of the bank who was at the working section of the Deposit Service Department
(DSD), motioning to the respondent to get the check. The latter stood up and proceeded in the
direction of Casil's workstation. After the respondent had taken about six to seven paces from the
sofa, Caspe and the company guard approached him. The guards politely showed Ongsiapco's
Memorandum to the respondent and told the latter that he was not allowed to enter the DSD working
area; it was lunch break and no outsider was allowed in that area.36The respondent looked at the
Memorandum and complied.

On May 29, 1998, the trial court rendered judgment in favor of the respondent. The fallo of the
decision reads:

WHEREFORE, premises considered, defendants are hereby adjudged liable to plaintiff and
orders them to rescind and set-aside the Memorandum of November 15, 1995 and orders
them to pay plaintiff the following:

1) the amount of P100,000.00 as moral damages;

 Page 61 of 68

2) the amount of P50,000.00 as exemplary damages;

3) P50,000.00 for and as attorney's fees;

4) Cost of suit.

Defendants' counterclaim is dismissed for lack of merit.

SO ORDERED.37

The trial court held that the petitioners abused their right; hence, were liable to the respondent for
damages under Article 19 of the New Civil Code.

The petitioners appealed the decision to the Court of Appeals and raised the following issues:

4.1 Did the appellants abuse their right when they issued the Memorandum?

4.2 Did the appellants abuse their right when Basco was asked to leave the bank premises,
in implementation of the Memorandum, on 21 December 1995?

4.3. Did the appellants abuse their right when Basco was asked to leave the bank premises,
in implementation of the Memorandum, on 31 January 1995?

4.4. Is Basco entitled to moral and exemplary damages and attorney's fees?

4.5. Are the appellants entitled to their counterclaim?38

The CA rendered a Decision on March 30, 2000, affirming the decision of the RTC with
modifications. The CA deleted the awards for moral and exemplary damages, but ordered the
petitioner bank to pay nominal damages on its finding that latter abused its right when its security
guards stopped the respondent from proceeding to the working area near the ATM section to get the
check from Casil. The decretal portion of the decision reads:

WHEREFORE, the Decision of the Regional Trial Court dated May 29, 1998 is hereby
MODIFIED as follows:

1. The awards for moral and exemplary damages are deleted;

2. The award for attorney's fees is deleted;

3. The order rescinding Memorandum dated November 15, 1995 is set aside; and

4. UCPB is ordered to pay nominal damages in the amount of P25,000.00 to plaintiff-

appellee.

Costs de oficio.39

The Present Petition

The petitioners now raise the following issues before this Court:
 Page 62 of 68

I. Whether or not the appellate court erred when it found that UCPB excessively exercised its
right to self-help to the detriment of Basco as a depositor, when on January 31, 1996, its
security personnel stopped respondent from proceeding to the area restricted to UCPB's
employees.

II. Whether or not the appellate court erred when it ruled that respondent is entitled to
nominal damages.

III. Whether or not the appellate court erred when it did not award the petitioners' valid and
lawful counterclaim.40

The core issues are the following: (a) whether or not the petitioner bank abused its right when it
issued, through petitioner Ongsiapco, the Memorandum barring the respondent access to all bank
premises; (b) whether or not petitioner bank is liable for nominal damages in view of the incident
involving its security guard Caspe, who stopped the respondent from proceeding to the working area
of the ATM section to get the check from Casil; and (c) whether or not the petitioner bank is entitled
to damages on its counterclaim.

The Ruling of the Court

On the first issue, the petitioners aver that the petitioner bank has the right to prohibit the respondent
from access to all bank premises under Article 429 of the New Civil Code, which provides that:

Art. 429. The owner or lawful possessor of a thing has the right to exclude any person from
the enjoyment and disposal thereof. For this purpose, he may use such force as may be
reasonably necessary to repel or prevent an actual or threatened unlawful physical invasion
or usurpation of his property.

The petitioners contend that the provision which enunciates the principle of self-help applies when
there is a legitimate necessity to personally or through another, prevent not only an unlawful, actual,
but also a threatened unlawful aggression or usurpation of its properties and records, and its
personnel and customers/clients who are in its premises. The petitioners assert that petitioner
Ongsiapco issued his Memorandum dated November 15, 1995 because the respondent had been
dismissed from his employment for varied grave offenses; hence, his presence in the premises of
the bank posed a threat to the integrity of its records and to the persons of its personnel. Besides,
the petitioners contend, the respondent, while in the bank premises, conversed with bank employees
about his complaint for illegal dismissal against the petitioner bank then pending before the Labor
Arbiter, including negotiations with the petitioner bank's counsels for an amicable settlement of the
said case.

The respondent, for his part, avers that Article 429 of the New Civil Code does not give to the
petitioner bank the absolute right to exclude him, a stockholder and a depositor, from having access
to the bank premises, absent any clear and convincing evidence that his presence therein posed an
imminent threat or peril to its property and records, and the persons of its customers/clients.

We agree with the respondent bank that it has the right to exclude certain individuals from its
premises or to limit their access thereto as to time, to protect, not only its premises and records, but
also the persons of its personnel and its customers/clients while in the premises. After all, by its very
nature, the business of the petitioner bank is so impressed with public trust; banks are mandated to
exercise a higher degree of diligence in the handling of its affairs than that expected of an ordinary
business enterprise.41 Banks handle transactions involving millions of pesos and properties worth
considerable sums of money. The banking business will thrive only as long as it maintains the trust
 Page 63 of 68

and confidence of its customers/clients. Indeed, the very nature of their work, the degree of
responsibility, care and trustworthiness expected of officials and employees of the bank is far greater
than those of ordinary officers and employees in the other business firms.42 Hence, no effort must be
spared by banks and their officers and employees to ensure and preserve the trust and confidence
of the general public and its customers/clients, as well as the integrity of its records and the safety
and well being of its customers/clients while in its premises. For the said purpose, banks may
impose reasonable conditions or limitations to access by non-employees to its premises and
records, such as the exclusion of non-employees from the working areas for employees, even
absent any imminent or actual unlawful aggression on or an invasion of its properties or usurpation
thereof, provided that such limitations are not contrary to the law.43

It bears stressing that property rights must be considered, for many purposes, not as absolute,
unrestricted dominions but as an aggregation of qualified privileges, the limits of which are
prescribed by the equality of rights, and the correlation of rights and obligations necessary for the
highest enjoyment of property by the entire community of proprietors.44 Indeed, in Rellosa vs.
Pellosis,45 we held that:

Petitioner might verily be the owner of the land, with the right to enjoy and to exclude any
person from the enjoyment and disposal thereof, but the exercise of these rights is not
without limitations. The abuse of rights rule established in Article 19 of the Civil Code
requires every person to act with justice, to give everyone his due; and to observe honesty
and good faith. When right is exercised in a manner which discards these norms resulting in
damage to another, a legal wrong is committed for which the actor can be held accountable.

Rights of property, like all other social and conventional rights, are subject to such reasonable
limitations in their enjoyment and to such reasonable restraints established by law.46

In this case, the Memorandum of the petitioner Ongsiapco dated November 15, 1995, reads as
follows:

MEMO TO : MR. JESUS M. BELANIO

Vice President
Security Department

D A T E : 15 November 1995

R E : MR. RUBEN E. BASCO

Please be advised that Mr. Ruben E. Basco was terminated for a cause by the Bank on 19
June 1992. He filed charges against the bank and the case is still on-going.

In view of this, he should not be allowed access to all bank premises.

(Sgd.) LUIS MA. ONGSIAPCO

First Vice President

Human Resource Division

16 November 1995

TO: ALL GUARDS

 Page 64 of 68

ON DUTY

Strictly adhere/impose Security Procedure RE: Admission to Bank premises.

For your compliance.

(Signature) 11/16/95

JOSE G. TORIAGA47

On its face, the Memorandum barred the respondent, a stockholder of the petitioner bank and one of
its depositors, from gaining access to all bank premises under all circumstances. The said
Memorandum is all-embracing and admits of no exceptions whatsoever. Moreover, the security
guards were enjoined to strictly implement the same.

We agree that the petitioner may prohibit non-employees from entering the working area of the ATM
section. However, under the said Memorandum, even if the respondent wished to go to the bank to
encash a check drawn and issued to him by a depositor of the petitioner bank in payment of an
obligation, or to withdraw from his account therein, or to transact business with the said bank and
exercise his right as a depositor, he could not do so as he was barred from entry into the bank. Even
if the respondent wanted to go to the petitioner bank to confer with the corporate secretary in
connection with his shares of stock therein, he could not do so, since as stated in the Memorandum
of petitioner Ongsiapco, he would not be allowed access to all the bank premises. The said
Memorandum, as worded, violates the right of the respondent as a stockholder or a depositor of the
petitioner bank, for being capricious and arbitrary.

The Memorandum even contravenes Article XII, paragraph 4 (4.1 and 4.2) of the Code of Ethics
issued by the petitioner bank itself, which provides that one whose employment had been terminated
by the petitioner bank may, nevertheless, be allowed access to bank premises, thus:

4.1 As a client of the Bank in the transaction of a regular bank-client activity.

4.2 When the offending party is on official business concerning his employment with the
Bank with the prior approval and supervision of the Head of HRD or of the Division Head, or
of the Branch Head in case of branches.48

For another, the Memorandum, as worded, is contrary to the intention of the petitioners. Evidently,
the petitioners did not intend to bar the respondent from access to all bank premises under all
circumstances. When he testified, petitioner Ongsiapco admitted that a bank employee whose
services had been terminated may be allowed to see an employee of the bank and may be allowed
access to the bank premises under certain conditions, viz:

ATTY. R. ALIKPALA

Q So the permission you are referring to is merely a permission to be granted by the

security guard?

A No, sir, not the security guard. The security will call the office where they are going.
Because this is the same procedure they do for visitors. Anybody who wants to see anybody
 Page 65 of 68

in the bank before they are allowed access or entry, they call up the department or the
division.

Q So I want to clarify, Mr. Witness. Former bank employees are not allowed within the
bank premises until after the security guard call, which ever department they are headed for,
and that they give the permission and they tell the security guard to allow the person?

A Yes, Sir, that is the usual procedure.

Q If an employee resigned from the bank, same treatment?

A Yes, Sir.

Q If an employee was terminated by the bank for cause, same treatment?

A Yes, Sir.

Q Outsiders who are not employees or who were never employees of the bank also must
ask permission?

A Yes, Sir. Because there is a security control at the lobby.

Q You mentioned that this is a general rule?

A Yes, Sir.

Q Is this rule written down in black and white anywhere?

A I think this is more of a security procedure.

Q But being a huge financial institution, we expect Cocobank has its procedure written
down in black and white?

ATTY. A. BATUHAN

Your Honor, objection. Argumentative, Your Honor.

There is no question posed at all, Your Honor.

COURT

Answer. Is there any guideline?

A There must be a guideline of the security.

Q But you are not very familiar about the security procedures?

A Yes, Sir.

ATTY. R. ALIKPALA
 Page 66 of 68

Q Mr. Ongsiapco, the agency that you hired follows certain procedures?

A Yes, Sir.

Q Which of course are under the direct control and supervision of the bank?

A Yes, Sir.

Q And did the security agency have any of this procedure written down?

A It will be given to them by the Security Department, because they are under the
Security Department.

Q But if an employee is only entering the ground floor bank area, where customers of the
bank are normally allowed, whether depositors or not, they don't need to ask for express
permission, is that correct?

A Yes, if they are client.

Q Even if they are not client, but let us say they have to encash a check paid to them by
someone?

A He is a client then.

Q But he is not yet a client when he enters the bank premises. He only becomes you
know because you do not all these people, you do not know every client of the bank so you
just allow them inside the bank?

A Yes, the premises.49

Petitioner Ongsiapco also testified that a former employee who is a customer/client of the petitioner
bank also has access to the bank premises, except those areas reserved for its officers and
employees, such as the working areas:

ATTY. R. ALIKPALA

Q So Mr. Witness, just for the sake of clarity. The ground floor area is where the regular
consumer banking services are held? What do you call this portion?

A That is the Deposit Servicing Department.

Q Where the .

A Where the people transact business.

ATTY. R. ALIKAPALA

Q They are freely allowed in this area?

A Yes, Sir.
 Page 67 of 68

Q This is the area where there are counters, Teller, where a person would normally go to
let us say open a bank account or to request for manager's check, is that correct?

A Yes, Sir.

Q So, in this portion, no, I mean beyond this portion, meaning the working areas and
second floor up, outsiders will have to ask express permission from the security guard?

A Yes, Sir.

Q And you say that the security guards are instructed to verify the purpose of every
person who goes into this area?

A As far as I know, sir.50

It behooved the petitioners to revise such Memorandum to conform to its Code of Ethics and their
intentions when it was issued, absent facts and circumstances that occurred pendente lite which
warrant the retention of the Memorandum as presently worded.

On the second issue, the Court of Appeals ruled that the petitioner bank is liable for nominal
damages to the respondent despite its finding that the petitioners had the right to issue the
Memorandum. The CA ratiocinated that the petitioner bank should have allowed the respondent to
walk towards the restricted area of the ATM section until they were sure that he had entered such
area, and only then could the guards enforce the Memorandum of petitioner Ongsiapco. The Court
of Appeals ruled that for such failure of the security guards, the petitioner bank thereby abused its
right of self-help and violated the respondent's right as one of its depositors:

With respect, however, to the second incident on January 31, 1996, it appears that although
according to UCPB security personnel they tried to stop plaintiff-appellee from proceeding to
the stairs leading to the upper floors, which were limited to bank personnel only (TSN, pp. 6-
9, June 4, 1997), the said act exposed plaintiff-appellee to humiliation considering that it was
done in full view of other bank customers. UCPB security personnel should have waited until
they were sure that plaintiff-appellee had entered the restricted areas and then implemented
the memorandum order by asking him to leave the premises. Technically, plaintiff-appellee
was still in the depositing area when UCPB security personnel approached him. In this case,
UCPB's exercise of its right to self-help was in excess and abusive to the detriment of the
right of plaintiff-appellee as depositor of said Bank, hence, warranting the award of nominal
damages in favor of plaintiff-appellee. Nominal damages are adjudicated in order that a right
of a plaintiff, which has been violated or invaded by the defendant, may be vindicated or
recognized and not for the purpose of indemnifying any loss suffered by him (Japan Airlines
vs. Court of Appeals, 294 SCRA 19).51

The petitioners contend that the respondent is not entitled to nominal damages and that the
appellate court erred in so ruling for the following reasons: (a) the respondent failed to prove that the
petitioner bank violated any of his rights; (b) the respondent did not suffer any humiliation because of
the overt acts of the security guards; (c) even if the respondent did suffer humiliation, there was no
breach of duty committed by the petitioner bank since its security guards politely asked the
respondent not to proceed to the working area of the ATM section because they merely acted
pursuant to the Memorandum of petitioner Ongsiapco, and accordingly, under Article 429 of the New
Civil Code, this is a case of damnum absque injuria;52 and (d) the respondent staged the whole
incident so that he could create evidence to file suit against the petitioners.
 Page 68 of 68

We rule in favor of the petitioners.

The evidence on record shows that Casil was in the working area of the ATM section on the ground
floor when he motioned the respondent to approach him and receive the check. The respondent
then stood up and walked towards the direction of Casil. Indubitably, the respondent was set to enter
the working area, where non-employees were prohibited entry; from there, the respondent could go
up to the upper floors of the bank's premises through the elevator or the stairway. Caspe and the
company guard had no other recourse but prevent the respondent from going to and entering such
working area. The security guards need not have waited for the respondent to actually commence
entering the working area before stopping the latter. Indeed, it would have been more embarrassing
for the respondent to have started walking to the working area only to be halted by two uniformed
security guards and disallowed entry, in full view of bank customers. It bears stressing that the
security guards were polite to the respondent and even apologized for any inconvenience caused
him. The respondent could have just motioned to Casil to give him the check at the lobby near the
teller's booth, instead of proceeding to and entering the working area himself, which the respondent
knew to be an area off-limits to non-employees. He did not.

The respondent failed to adduce evidence other than his testimony that people in the ground floor of
the petitioner bank saw him being stopped from proceeding to the working area of the bank.
Evidently, the respondent did not suffer embarrassment, inconvenience or discomfort which,
however, partakes of the nature of damnum absque injuria, i.e. damage without injury or damage
inflicted without injustice, or loss or damage without violation of legal rights, or a wrong due to a pain
for which the law provides no remedy.53 Hence, the award of nominal damages by the Court of
Appeals should be deleted.

On the third issue, we now hold that the petitioner bank is not entitled to damages and attorney's
fees as its counterclaim. There is no evidence on record that the respondent acted in bad faith or
with malice in filing his complaint against the petitioners. Well-settled is the rule that the
commencement of an action does not per se make the action wrongful and subject the action to
damages, for the law could not have meant to impose a penalty on the right to litigate.

We reiterate case law that if damages result from a party's exercise of a right, it is damnum absque
injuria.54

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision of the Court
of Appeals is REVERSED and SET ASIDE. The complaint of the respondent in the trial court and
the counterclaims of the petitioners are DISMISSED.

No costs.

SO ORDERED.

Austria-Martinez, (Acting Chairman), Tinga, and Chico-Nazario, JJ., concur.

Puno, (Chairman), J., on official leave.